Peter Nurse

Investing.com. European stock market are likely to decline at Thursday’s open ahead of a critical meeting of European Central Bank. The key meeting should give a timeline for the European Central Bank to increase interest rates in order to reduce rising inflation.

At 2 AM ET (0600 GMT), Germany’s contract traded 0.7% lower while France fell 0.9%. The U.K contract was down 0.6%.

European markets will focus on the ECB’s later in the session, with the central bank widely expected to announce an imminent end to large-scale asset purchases, paving the way for a first increase in in more than a decade next month to combat record levels of inflation.

President Christine Lagarde unveiled a plan last month to end the central bank’s very accommodative monetary policy, saying that the ECB’s minus 0.5% should start rising in July and could be at zero or “slightly above” by the end of September before rising further “towards the neutral rate.”

“Market expectations for a rate hike this week are close to zero, while 25bp increases in July and September are fully in the price, in line with recent ECB communication,” said analysts at ING, in a note. “However, markets are pricing in a total of 130bp of tightening by year-end, which would imply a 50bp hike at one of the four remaining meetings – after the June one – this year.”

There is little in the way of significant economic data due for release in Europe Thursday, but late Wednesday, China released stronger-than-expected , suggesting a rebound in the world’s second largest economy as it lifts its stringent COVID-19 measures.

China’s May grew 16.9% year-on-year, far faster than April’s growth of 3.9%, while in May grew 4.1% year-on-year, the first gain in three months and compared with flat growth in April.

This strong trade data helped oil prices stabilize around three-month highs, as they pointed to an economic recovery in the world’s largest crude importer.

Other data, released Wednesday by the U.S., revealed a rise of over 2,000,000 barrels of crude but a drop in U.S. gasoline inventories of 812,000 barrels. This shows that there was still soaring fuel prices and that fuel demand is resilient this summer.

The futures closed 0.1% below $122.05/barrel at 2AM ET. However, the contract rose 0.1%, to $123.62. The benchmarks were at their highest close Wednesday since March 8th.

Also, the price of gold fell 0.1% at $1,854.10/oz while it traded 0.1% higher to 1.0716.