June 4, 2020 / 7:26 AM / a month ago

European shares inch lower ahead of ECB meeting, carmakers drag

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June 4 (Reuters) - A European stock market rally paused on Thursday, with investors focussing on a European Central Bank meeting where policymakers are expected to provide more aid for the battered euro zone economy.

The pan-European STOXX 600 index slipped 0.5% by 0708 GMT, but held near its early March highs, while eurozone stocks were down 0.6%.

Automakers and banks led the declines, falling 2.5% and 1.8%, respectively.

Equity markets have bounced strongly this week, with Wall Street’s tech-heavy Nasdaq nearing record levels as signs of recovery from a coronavirus-forced recession, optimism over a COVID-19 vaccine and hopes of more stimulus boosted risk appetite.

Investors expect the ECB to upsize bond purchases by 500 billion euros ($560.25 billion), but the only question is whether it will act on Thursday or hold out until July as a deal on European Union-wide fiscal support strengthens the case for patience.

Meanwhile, Germany’s coalition parties agreed a 130-billion-euros stimulus package to speed up a recovery from the coronavirus on Wednesday, but shares in Daimler, BMW and Volkswagen slid between 2.6% and 4.5% as the packaged favoured electric cars.

French spirits company Remy Cointreau jumped 6.9% after it predicted a strong recovery in the second half, driven by China and the United States.

$1 = 0.8925 euros Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur

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