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Shares stabilize after sell-off, all eyes now on ECB

LONDON/HONG KONG--European shares steadied on Thursday after three days of selling, as focus turned to whether the European Central Bank will offer any new economic stimulus after the Bank of England left its interest rates at a record low.

Markets remained under pressure amid peculation about the future of U.S. monetary stimulus. That kept bond yields elevated and left shares struggling to recover from this week's declines.

European shares were virtually flat before the 12:45 p.m. GMT ECB rate decision and 1:30 p.m. GMT news conference, as traders waited to hear what the head of the bank, Mario Draghi, had to say.

The ECB is expected to hold off any new policy action after delivering a surprise rate cut last month. Attention is shifting to the bank's new economic forecasts, amid worries the euro zone is slipping towards Japan-style deflation.

“The main focus will be the forecasts and what will 2015 look like,” said Ned Rumpeltin, the head of G10 FX strategy for Standard Chartered. “If the inflation mid-point is below 1.5 percent, I think that is an affirmation of their easing bias through next year.”

The Bank of England left its rates and bond buying unchanged, as expected. Markets still remained cautious before the ECB meeting and U.S. economic data, particularly the non-farm payrolls report on Friday.

Fed Caution

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