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European stocks dip as Google, IBM drop

US tech heavyweights dampen upbeat tone

European stocks dipped on Thursday as disappointing earnings from US tech heavyweights Google and IBM dampened the previous session’s upbeat tone on Wall Street, and the dollar weakened on dovish remarks from the Federal Reserve.

Google Inc fell as much as six per cent after first-quarter revenue fell short of Wall Street targets and margins narrowed as its ads prices decline persisted.

Shares in IBM Corp fell as much as four per cent after the world’s largest technology services company reported its lowest quarterly revenue for five years as it struggles with falling demand for storage and server products.

European stocks fell 0.14 per cent, with upcoming Easter holidays, profit warnings from French spirits maker Remy Cointreau and German business software maker SAP and tensions over Ukraine also weighing.

Wall Street had ended Wednesday with more vigour. Both the Dow and S&P 500 gained about one per cent, while the Nasdaq bounced by 1.29 per cent.

Economic news out of the United States was mixed, with industrial production beating forecasts but housing starts disappointing.

Still, investors were cheered by the Fed’s Beige Book of anecdotal information on business activity which showed activity picked up in recent weeks as weather-related drag eased.

The dollar and US Treasury yields fell after Fed Chair Janet Yellen on Wednesday said it might take two years to return to full employment and there was more risk of inflation staying too low than going too high.

Achieving the Fed’s economic goals “will likely require low real interest rates for some time”, a policy view she said was shared broadly across many advanced economies.

“Yellen’s comments have hurt the dollar as she has indicated that the Fed is in no hurry to raise rates,” Societe Generale currency strategist Alvin Tan said.

“With US yields at the bottom of its recent range, we expect the dollar to remain soft. Only when yields pick up and the market focuses on rate hikes by the Fed will the dollar start to rally. That we expect some time in the third quarter of this year.”

Yields on Treasury 30-year bonds dipped to their lowest since June at 3.44 per cent before pulling back to 3.456 per cent. German Bund futures rose 4 ticks to 144.40. The dollar eased to 101.97 yen from an early high at 102.26. The euro was firmer at $1.3838, but well within recent ranges.