September 7, 2017 / 8:45 AM / 9 months ago

European shares cautious ahead of ECB meeting; autos lift German stocks

MILAN, Sept 7 (Reuters) - A fifth day of gains in auto stocks helped German shares outperform a sluggish open for European equities on Thursday with banks under pressure before a much-awaited European Central Bank policy meeting.

The German blue chip DAX index, where big carmakers including VW are listed, rose to its highest level in two weeks before paring some gains. By 0735 GMT the index was up 0.5 percent, while the broader pan-European STOXX 600 benchmark was down 0.1 percent.

Euro zone banks fell 0.3 percent. The sector, which benefits from higher interest rates and yields, has been under pressure recently after strength in the single currency fuelled talk the ECB could delay monetary policy tightening.

ECB President Mario Draghi is set to start laying the groundwork for stimulus reduction when policymakers meet on Thursday, giving investors some hints but probably holding off on any major commitment.

Trading was cautious ahead of the central bank meeting, with defensive sectors such as consumer goods adding the most points the STOXX 600.

Among individual stock movers, tobacco firm Imperial Brands was the top riser, up 2.9 percent after selling part of its stake in Spanish logistics company Logista.

British outsourcer Capita was among the biggest fallers, dropping 5 percent after restating its 2016 profit following accounting changes.

Reporting by Danilo Masoni, Editing by Kit Rees

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