European stocks tumble as ECB stops short on stimulus

European shares slumped while the euro lifted off a two-year low after the European Central Bank disappointed markets eager for stimulus to revive the stalling eurozone economy.
The ECB held its main "refinancing" rate steady at 0.05 percent, as expected at its monthly policy meeting.
But while its chief Mario Draghi said the ECB has stepped up preparations for more anti-deflation measures, these will be reassessed only in January.
After spending the morning in positive territory, European stocks fell.
London's benchmark FTSE 100 dropped 0.55 percent compared with Wednesday's close to 6,679.37 points.
Frankfurt's DAX 30 lost 1.21 percent to 9,851.35 points and the CAC 40 in Paris sank 1.55 percent to 4,323.89.
Bucking the trend, Ryanair shares soared 8.37 percent in Dublin trading to close at 9.45 euros after the Irish low-cost airline ramped up its annual earnings forecast on a surge in monthly passenger numbers.
The European single currency pulled up to $1.2380, after having hit $1.2280 -- its lowest point since August 2012.
"Despite what appeared to be his best efforts at appearing dovish and open to stronger unconventional stimulus efforts, the markets were simply disappointed that the job of fighting deflation had been passed off to next year," said market analyst Craig Erlam at trading group Alpari.
"We may not have expected QE today but the least we wanted was a strong sign that it is to come and Draghi was very non-committal."
The alarming drop in eurozone inflation in recent months has increased on the ECB to undertake massive stimulus measures like central banks in Britain, Japan and the United States have done.
Falling prices may sound good for the consumer, but they can trigger a vicious spiral where businesses and households delay purchases, throttling demand and causing companies to lay off workers.
But all Draghi would say is that "early next year the (ECB's) governing council will reassess the monetary stimulus achieved, the expansion of the balance sheet and the outlook for price developments."
The eurozone central bank also cut its inflation and growth forecasts.
Inflation is now expected to slow to 0.5 percent in 2014, 0.7 percent in 2015 and 1.3 percent in 2016, and Draghi warned inflation could slow further due to the recent decline in oil prices.
The economic growth forecast for this year was cut to 0.8 percent, 1.0 percent next year and 1.5 percent in 2016.
- Doubts on stimulus size -
Draghi "could hardly have sent clearer signals today that the central bank will launch a programme of quantitative easing very soon, probably in January," said Jonathan Loynes, chief European economist at Capital Economics.
However, questions remain on the scope of the programme.
Loynes said "we doubt that the policy will be big and effective enough to revive the eurozone economy and avert deflation."
The Bank of England on Thursday also held its key interest rate at a record low of 0.50 percent against a backdrop of tepid inflation that could threaten growth.
US stocks mostly followed European markets lower Thursday on the ECB's stopping short of announcing new stimulus measures.
About 35 minute into trade, the Dow Jones Industrial Average stood at 17,866.78, down 0.26 percent.
The broad-based S&P 500 dipped 0.16 percent to 2,071.26, while the tech-rich Nasdaq Composite Index gained 0.12 percent at 4,780.42.
Optimism about the US economy sent the dollar Thursday above 120 yen for the first time in more than seven years, as Japanese stimulus weighed heavily on the yen.
At around 1420 GMT, the US currency climbed to 120.17 yen, its highest level since July 26, 2007, before easing back to stand at 119.66 yen.
Asian stock markets closed higher Thursday following record close overnight on Wall Street, as investors cheered an upbeat report on the economy from the US central bank.