London - The euro slid on Tuesday against rival currencies after European Central Bank chief Mario Draghi hinted the bank will stick to its loose monetary policy for now.
London and Paris equity markets shed about half a percent, but Frankfurt turned flat.
Trading was somewhat muted one day after a public holiday in the British capital and also on Wall Street.
British Airways owner IAG saw its share price slide after a chronic IT crisis sparked thousands of flight cancellations over the busy holiday weekend.
However, Draghi stole the limelight after declaring that the ECB was "firmly convinced" it must maintain its interventions in the eurozone economy to avoid undermining
"We remain firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary," he told European Parliament lawmakers in Brussels on Monday.
The comments disappointed those who had hoped for some form of tightening at the ECB's upcoming June gathering.
"Draghi ... has taken some wind of the euro-dollar rally by saying that the eurozone still needs quantitative easing," said analyst Naeem Aslam at trading firm Think Markets.
The ECB has set interest rates at historic lows, offered cheap loans to banks, and buys tens of billions of euros in bonds each month in a bid to pump cash through the financial system and into the real economy.
Derek Halpenny,
Reports suggested Italy could hold elections earlier than planned, and there was also uncertainty over further financing for Greece, Hardman said.
Back in London, IAG shares fell 2.61% to 598 pence after three days of global flight disruption.
Some 75 000 passengers were affected by the computer system outage that caused chaotic scenes at London Gatwick and Heathrow, Europe's busiest airport.
"IAG is in the doldrums after a long weekend of chaos at British Airways," noted ETX Capital analyst Neil Wilson.
"BA faces all kinds of questions in the wake of its IT failure and investors are rightly turning a bit cautious.
"It is estimated that the cost of the fiasco might be around €100m, or around five percent of pre-tax profits this year. Far worse is the reputational damage to the brand."
In Asia, most stock markets drifted lower in holiday-thinned trade on Tuesday, with Hong Kong and Shanghai shut.
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