September 8, 2016 / 4:06 PM / 2 years ago

European shares drop as ECB's Draghi cools stimulus talk

* STOXX 600 drops 0.3 percent

* Draghi says QE extension not discussed

* ECB holds rates, sticks to stimulus timetable

* Pearson drops on weak peer results

* Micro Focus surges after Hewlett Packard deal (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

By Alistair Smout and Sudip Kar-Gupta

LONDON, Sept 8 (Reuters) - European stock markets fell on Thursday, turning lower after the European Central Bank stuck to its timetable for its stimulus programme and President Mario Draghi said an extension had not been discussed.

The ECB held interest rates steady, as expected, and investors were looking to Draghi’s press conference for dovish signs that the central bank’s programme of quantitative easing could be allowed to run longer than scheduled.

However, the STOXX 600 hit session lows shortly after Draghi said such an extension of the programme had not been discussed, while the euro rose.

“It seems the recent deterioration in survey and inflation data is still not enough to push the ECB to ease further. While today’s inaction on policy is not too surprising, given their traditionally deliberate nature, we were expecting some language that would help prepare the market for easing later this year,” said Timothy Graf, head of macro strategy at State Street Global Markets EMEA.

The STOXX 600 ended down 0.3 percent, dropping from near eight-month highs but ending up from the day’s lows.

The index is down nearly 5 percent in 2016, although it has rallied over the last two months from lows reached in June after Britain’s shock ‘Brexit’ vote to quit the European Union.

Pearson was the top faller on Thursday, tumbling 7.7 percent on readacross from disappointing results from U.S. peer John Wiley.

Chip makers also came under pressure, with Austria Microsystems, ASML and Dialog Semiconductor down 3.6-4.9 percent, after Apple, a major user of chips, released a new iPhone which analysts said was underwhelming.

Among risers, British software company Micro Focus surged 14.7 percent, the best-performing stock on the STOXX 600 index, after sealing an $8.8 billion deal for Hewlett Packard Enterprise to merge its non-core software assets with Micro Focus’s business.

However, Rocket Internet fell 4.4 percent after the German e-commerce investment company cut the valuation of its Home24 online furniture business. (Editing by Gareth Jones)

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