Europe close: Stocks little changed as Draghi urges reforms

European stocks were little changed as European Central Bank president Mario Draghi urged governments in the bloc to do more to boost their economies.

Speaking at an ECB conference in Portugal, Draghi said government structural reforms and aggressive monetary easing are the key to lasting stability in the Eurozone.

He also said that the economic outlook for the Eurozone is “brighter today than it has been for seven long years.”

Greece continued to be closely watched after government spokesman Gabriel Sakellaridis told Skai TV that the country expects to reach a reforms deal with lenders in the next 10 days.

German Chancellor Angela Merkel sounded a much more cautious note, however, saying there was “still a lot to do” following her late-night talks with French President Francois Hollande and Greek Prime Minister Alexis Tsipras on Thursday on the sidelines of the EU summit in Riga.

Data-wise, German gross domestic product expanded by 0.3% in the first quarter after 0.7% growth at the end of 2014, confirming a preliminary estimate published last week.

A slightly better than expected German Ifo survey for May failed to have any impact on markets. The Ifo Institute index of German business confidence printed at 108.5 from 108.6 in April, which was a touch ahead of analysts’ estimates of 108.3.

Elsewhere, the French manufacturing confidence index rose to 103 in May from 102 in April - better than expected and its highest level since August 2011.

The euro fell 0.71% to $1.1033.

Stateside, the consumer price index (CPI) rose 0.1% month-on-month in April, easing back from a 0.2% in March, as forecast by analysts. The Bureau of Labor Statistics said compared to a year ago the US fell further into deflation, down 0.2% year-on-year in April, as expected, following a 0.1% drop in March.

Excluding energy and food, core inflation rose 0.3% month-on-month in April, better than the 0.2% gain expected. The Federal Reserve is looking for signs that inflation is picking up towards its 2% target as they determine the timing of the first interest rate hike since June 2006. Fed Chair Janet Yellen will speak in Providence, Rhode Island at 18:00 BST, potentially shedding further light on the central bank’s next move.

"The 0.3% month-on-month increase in core consumer prices in April, which pushed the three-month annualised rate of core inflation up to a four-year high of 2.6%, leaves the Fed with less scope to delay raising interest rates," Capital Economics said.

In corporate news, Swiss luxury goods company Richemont fell after it posted a 36% drop in annual profit on the back of previously-announced losses on financial instruments.

HSBC nudged higher after the bank confirmed rumours that it is looking at a disposal of its Brazilian operators, although it has not made any decisions on the matter yet.

Shares in UK water company Severn Trent slipped after it posted a 53.5% drop in full-year pre-tax profit, pointing to a fair value loss on financial instruments, largely due to lower expectations for future interest rates, and an exceptional tax credit in the previous year.

Bouygues SA and Orange SA dropped as the French economy minister told Les Echos now is not the time for industry consolidation in the nation.

Areva SA slumped following a report that Engie won’t buy the French builder of atomic plants.