By Patrick Graham
LONDON (Reuters) - Stocks dipped and the euro gained on Thursday after the European Central Bank made only its previous broad commitment to run its bond-buying program for as long as needed, stopping short of a formal extension of the scheme.
After a mixed bag of data over the past month, with the fragile side of the euro zone economy underlined by poor German industrial orders this week, many market players had thought the ECB might push ahead early with yet more stimulus moves.
Its failure to act knocked Germany's DAX index half a percent lower on the day, pulling pan-European indices of blue chip companies down by around a quarter of a percent <.STOXX50E> <.FTEU3>.
After ECB chief Mario Draghi said the bank had not even discussed an extension of quantitative easing, the euro gained more ground, hitting a two-week high of $1.1328. <EUR=EBS>
German government bond yields extended earlier rises, up 5 basis points on the day <DE10YT=TWEB> and U.S. stock markets were set to open lower. <ESc1> <1YMc1>
"People's expectations were again too high ahead of this decision and they have been caught offside," said Craig Erlam, an analyst with online broker Oanda.
"It has been well publicized that the ECB does face difficulties now with pushing forward with more bond-buying so it should be no surprise if they now take their time."
European markets had struggled to build on a solid session in Asia, where the first annual rise in Chinese imports since late 2014 helped keep share indices near one-year highs. <.MIAPJ0000PUS>
While the shaky outlook in Europe and the United States was not enough to spur the ECB into action, it may prove a positive for riskier investments like the Chinese and other emerging markets if the end result is to stave off another rise in U.S. Federal Reserve interest rates.
The Fed is moving at a snail's pace - one quarter point rate rise so far in almost three years of speculation - but a move this month or a clear signal one is coming before year-end would still be a shock to investors who have become dependent on funding that costs effectively nothing.
With U.S. officials heading in the opposite direction, new rounds of money-printing to support the broad buying of assets that has pushed stocks higher and many government bond yields deep into negative territory will have to come from the ECB and the Bank of Japan.
"The (ECB)... does not mind holding back with respect to (using) more aggressive measures, but the (bigger) question is how long they can afford to wait given that they are very late in the game of QE," said ThinkMarkets analyst Naeem Aslam.
The yen, pushed higher over the summer by the belief that the Bank of Japan has little left in its armoury to weaken the currency, was steady, having earlier firmed by as much as a third of a percent <JPY=>.
(Additional reporting by Jemima Kelly, Dhara Ranasinghe, Anirban Nag and Sudip Kar-Gupta; Editing by Nigel Stephenson and John Stonestreet)