European stocks drop on Rolls-Royce plunge, Draghi stimulus hint

A hint from European Central Bank head Mario Draghi that further policy easing is coming in December drove European markets on Thursday, pushing stocks into the green territory briefly and pressuring the euro and bond yields. However, high-profile corporate profit warnings eventually weighed on stocks.

The Stoxx Europe 600 fell 0.4% to 377.07, as only the technology and telecom sectors inched higher.

Comments from European Central Bank President Mario Draghi briefly pushed down the euro and supported stocks, and market players will also be watching Thursday’s heavy lineup of Federal Reserve speakers for hints to a possible U.S. interest-rate hike.

The euro plunged half a percent below $1.07 and the gap between 5-year U.S. and euro zone bond yields hit its highest since 1999.

Addressing the European Parliament today, Draghi said that inflation dynamics had somewhat weakened and that a "sustained normalization" of inflation could take longer to reach than expected.

"At our December monetary policy meeting, we will re-examine the degree of monetary policy accommodation," Draghi said.

Among the concerns for ECB officials is low inflation levels in the eurozone. Data released Thursday showed while there was a slight pickup in inflation in Germany and France, the readings remain well below the ECB’s target.

High-profile corporate profit warnings eventually weighed on sentiment in stocks. 

German DAX 30 was last down 0.5%, while France's CAC 40 was last 0.81% lower and British FTSE 100 lost 0.54%.