European shares fall back after ECB-led euro spike hits exporters

LONDON (Reuters) - European shares dropped on Thursday as a jump in the bloc’s currency following the European Central Bank’s policy meeting weighed on exporters, while disappointing updates prompted big moves on individual stocks.

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The pan-European STOXX 600 .STOXX ended 0.4 percent lower in a choppy session, reversing earlier gains as a spike in the euro EUR= dragged on export-oriented stocks.

The rally in both the currency and bond yields came after the ECB left its ultra easy monetary policy unchanged, and President Mario Draghi said that policymakers would discuss potential tweaks to its bond-buying program in the autumn.

Europe's basic resources .SXPP sector was the biggest faller, down 1.9 percent, while export-heavy aerospace and defense firms and autos .SXAP also came under pressure.

A rising currency has become a concern for investors as the second-quarter earnings season rolls around, with strategists at Deutsche Bank warning that every 10 percent move in the euro takes 5 percent off the STOXX 600’s earnings.

The euro has gained nearly 11 percent so far this year against the dollar.

“Since Draghi recently joined several other central banks with a more hawkish sounding stance on the future of QE and interest rates, we have seen a sharp rise in both Euro area government bond yields and the euro relative to other major currencies,” Jake Robbins, manager of the Premier Global Alpha Growth Fund at Premier Asset Management, said in note.

European banks .SX7P were 0.4 percent weaker, led lower by a 5.2 percent drop in Nordea's shares NDA.ST.

The Nordic region's biggest bank by market value fell after reporting second-quarter operating earnings below analysts' estimates, while Danske Bank DANSKE.CO retreated 1.4 percent after its quarterly earnings.

Germany's Lufthansa LHAG.DE led the travel and leisure sector .SXTP down with a 8.6 percent drop, while British budget airline easyJet EZJ.L fell nearly 6 percent after cautious comments on the outlook for summer pricing.

Swedish aerospace firm Saab SAABb.ST dropped 5.5 percent, its worst day in a year, after missing second-quarter forecasts.

But tech stocks .SX8P were a bright spot, led higher by Ingenico Group INGC.PA which gained more than 5 percent after the news that it is to buy rival Bambora for 1.5 billion euros.

Jewelry maker Pandora PNDORA.CO was the biggest STOXX gainer, surging more than 7 percent after Carnegie upgraded it to "buy" from "hold", citing positives in its Chinese market.

Anglo-Dutch conglomerate Unilever ULVR.L rose 1.7 percent after reporting slightly weaker than expected quarterly sales, but reaffirmed it was sticking to its full-year target.

Reporting by Kit Rees, Julien Ponthus and Helen Reid; editing by Alexander Smith