European stocks retreated, posting the biggest two-day slump in more than four months, as European Central Bank President Mario Draghi said that the economic recovery in the euro area remains subject to downside risks.

Draghi said that risks remain to the euro area’s economic recovery in the second half of this year.

“Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks,” the ECB’s president said at a press conference in Frankfurt. The central bank left its benchmark interest rate at a record low of 0.75 percent today, matching estimates from 54 of 56 economists in a Bloomberg survey. Two had predicted a cut to 0.5 percent.

In the U.K., the Bank of England’s Monetary Policy Committee held its key rate at a record low of 0.5 percent and maintained bond purchases at 375 billion pounds ($570 billion). Today’s meeting was the first since Chancellor of the Exchequer George Osborne gave the bank more flexibility over how long it takes to meet its 2 percent inflation target. The median estimates in surveys of economists had predicted no change for either policy.

National benchmark indexes declined in 16 of the 18 western-European markets. Germany’s DAX dropped 0.7 percent and France’s CAC 40 lost 0.8 percent. The U.K.’s FTSE 100 Index retreated 1.2 percent.

Banca Generali sank 5.1 percent to 13.85 euros for its longest streak of losses in more than five years. Assicurazioni Generali sold 12 percent of the Trieste, Italy-based private bank for 185 million euros. Italy’s biggest insurer holds a 51.5 percent controlling stake following the transaction.

EADS declined 2.7 percent to 39.25 euros after a term sheet obtained by Bloomberg News showed that Stichting Administratiekantoor Spanish EADS Shares Warehousing Foundation is selling 9.6 million shares in the aerospace company. Two people familiar with the transaction said that the shares were priced at 39.75 euros apiece.

Huhtamaki Oyj fell 2 percent to 15.25 euros. The packaging company said the Finnish Cultural Foundation, a shareholder, sold as many as 2.79 million shares, reducing its stake in the business to less than 15 percent.

BTG rose 1 percent to 362.1 pence. The drugmaker forecast revenue of 230 million pounds in 2013, compared with an earlier prediction of 205 million pounds to 215 million pounds.

U.S. stock fell slightly as government data showed more Americans than projected filed applications for unemployment benefits last week.

Global Stocks:

Nikkei  12,634.54 +272.34 +2.20%

Hang Seng 22,337.49 -30.33 -0.14%

FTSE  6,389.01 -31.27 -0.49%

CAC  3,783.81 +28.85 +0.77%

DAX  7,912.52 +37.77 +0.48%

Crude oil $93.91 -0.57%

Gold $1548.00 -0.35%

Downgrades:

Microsoft (MSFT) downgraded to Neutral from Buy at BofA/Merrill

Other:

Apple (AAPL) initiated with a Buy at Lazard Capital

European stocks were little changed, following yesterday’s biggest drop in five weeks, as investors awaited an update on monetary policy from European Central Bank President Mario Draghi. U.S. index futures advanced, while Asian shares retreated.

The Stoxx Europe 600 Index (SXXP) slipped 0.1 percent to 294.39 at 9:12 a.m. in London, paring a drop of as much as 0.3 percent.

Banca Generali retreated 5.8 percent to 13.75 euros. The Italian insurer offered a 12 percent stake for sale. Generali will retain control of the bank after the transaction.

EADS (EAD) lost 1.4 percent to 39.78 euros after a term sheet obtained by Bloomberg News showed that Stichting Administratiekantoor Spanish EADS Shares Warehousing Foundation is selling 9.6 million shares in the maker of Airbus airplanes. Two people familiar with the transaction said that the shares priced at 39.75 euros apiece.

Huhtamaki Oyj declined 2.6 percent to 15.16 euros. Shareholder (HUH1V) SKR is selling as many as 2.79 million shares in the packaging company in a so-called accelerated bookbuild.

BTG rose 4.3 percent to 374.1 pence. The drugmaker forecast revenue of 230 million pounds in 2013, compared with an earlier prediction of 205 million pounds to 215 million pounds.

Telefonica SA added 1.3 percent to 10.49 euros. People with knowledge of the matter said Europe’s most indebted telephone company has considered selling assets such as its Irish and Czech divisions.

To date:

FTSE 100 6,414.59 -5.69 -0.09%

CAC 40 3,783.75 +28.79 +0.77%

DAX 7,908.04 +33.29 +0.42%

Asian stocks pared declines, with Japanese shares reversing losses, after the Bank of Japan expanded its stimulus program in its first policy decision under new governor Haruhiko Kuroda.

Nikkei 225 12,634.54 +272.34 +2.20%

Hang Seng Closed

S&P/ASX 200 4,913.5 -44.18 -0.89%

Shanghai Composite Closed

Toyota Motor Corp., the world’s largest carmaker, advanced 2.8 percent, reversing an earlier drop, as the yen weakened against the dollar and Japanese government bonds rose.

Mitsubishi Estate Co surged 7.2 percent in Tokyo, leading gains among property firms.

Change % Change Last

Nikkei 225 12,362.2 +358.77 +2.99%

S&P/ASX 200 4,957.7 -27.81 -0.56%

Shanghai Composite 2,225.47 -2.27 -0.10%

FTSE 100 6,420.28 -70.38 -1.08%

CAC 40 3,754.96 -50.41 -1.32%

DAX 7,874.75 -69.12 -0.87%

DJIA 14,550.30 -111.66 -0.76%

S&P 500 1,553.69 -16.56 -1.05%

NASDAQ 3,218.60 -36.26 -1.11%