* STOXX inch lower, set for weekly gain
* Euro zone bank index hits 15-month high
* Autos, utilities lead sectoral fallers
* Tullow oil plunges on rights issue news
(Adds details, updates prices)
By Danilo Masoni
MILAN, March 17 European shares inched lower on
Friday, led down by export-oriented carmakers and utility
stocks, but banks outperformed after an ECB policymaker
rekindled talk of a possible rate hike.
ECB policymaker Ewald Nowotny said the central bank will
decide at a later time whether to raise interest rates before or
after ending its bond purchase programme, pushing euro zone
government bond yields higher.
The pan-European STOXX 600 index fell 0.1 percent,
erasing parts of the gains made in the previous session but
remaining on track to end a week with a gain.
But banks, whose margins benefits from higher rates, bucked
the weaker trend on Friday. The Austrian central bank governor
said the ECB could hike its below-zero remuneration of bank
deposits before the main rates at which it lends to banks.
Rabobank said Nowotny's comments had been over-interpreted,
even though they could not rule out the possibility of the
central bank tightening policy before ending its asset-buying.
"In our view, hiking rates before asset purchases have ended
still looks quite unlikely," analysts at the Dutch bank said in
a note to investors.
The euro zone bank index rose to its highest level
in more than 15 months, up more than 1 percent, with Germany's
Commerzbank leading the surge, while Europe's broader
bank index added 0.4 percent, with gains capped by
Nordea Bank going ex dividend.
Meanwhile, euro zone money markets showed around an 80
percent chance that the ECB could lift its deposit rate at its
December meeting, up from 60 percent a week ago.
Utilities, which tend to underperform when rates and
yields rise because that makes the dividend paying sector less
attractive, fell 0.7 percent, the second biggest sectoral
decliner in Europe after autos, which fell 0.8 percent.
Biggest drag on utilities was Italy's Enel, whose
shares fell 1.8 percent in spite of a proposed increase in its
Top fallers in the auto sector were German carmakers
Volkswagen, Porsche and BMW,
down between 1.2 and 1.6 percent.
Elsewhere, Tullow Oil plunged 15 percent, the top
faller on the STOXX 600 index, after the British oil services
company announced a 607 million pound share sale to reduce its
But London-focused housebuilder Berkeley Group rose
5.9 percent to their highest level since Britain voted to leave
the European Union, as investors cheered to full-year forecasts
at the top end of market estimates.
German airport operator Fraport rose 2.5 percent,
also boosted by a well-received 2017 guidance.
(Reporting by Danilo Masoni, editing by Pritha Sarkar)