Europe close: Nervous investors send stocks mostly lower
European stocks were mostly lower on Thursday amid nervousness after US markets crashed a day earlier on fears over a global economic slowdown, too-low inflation and a plunge in oil prices.
Heavy selling in stocks in the US ensued on Wednesday on the heels of a batch of weak economic indicators. However, the US market recovered after bullish remarks - made behind closed doors over the weekend - from the Federal Reserve's Janet Yellen and St.Louis Fed president James Bullard. The latter said the central bank should consider extending its bond-buying beyond the expected end-date of October following a recent drop in inflation expectations.
As for Fed chief Yellen, Bloomberg reported that she had voiced confidence in the durability of the US economic expansion, as opposed to the cautious tone evident in the most recent set of Fed minutes.
Acting as a backdrop, traders continued to monitor the ongoing crisis in Syria and oil prices.
At one point in the session front month West Texas crude futures moved below $80 per barrel for the first time since June 2012 but later in the day bounced back to $81.22 by the close of trading in European markets. Brent crude ended the day 0.14% lower at $83.66 per barrel.
Ebola, which has hurt travel and airline shares, has also been weighing on equities, with the UN saying the virus is “winning the race” as it spreads.
Low inflation also a concern on the continent
Continuing to weigh on investors' sentiment in the Eurozone was the perceived potential for political instability in Greece ahead of the February presidential elections.
As well Euro-area inflation was today confirmed at 0.3% year-on-year in September, well below the European Central Bank’s (ECB) target of just below 2%. That could stoke the ECB in action some believe, or it should.
Greek bonds declined to push 10-year yields higher in late morning trading after officials proposed an early exit to the country's international bail-out programme on Tuesday evening.
It has sparked concerns about Greek banks’ ability to self-fund without the support of the ECB. There are also fears that Athens might be attempting to lay the groundwork before backtracking on its commitments to economic reforms.
Credit Suisse said it remains “cautious” on the Greek banking sector.
In a bid to help stabilise the situation the ECB reduced the discount it applies to the bonds which Greek banks submit as collateral to borrow funds. A Greek central bank official said it would allow an additional €12bn of liquidity to be accessed by Greek banks.
"The move was decided late on Wednesday evening after talks between the government, the ECB and Greece's central bank governor," the official told Reuters.
In other Eurozone news, the EU has kicked off a two-week investigation of euro-area governments’ draft budgets.
Italian Prime Minister Matteo Renzi’s Cabinet has passed tax cuts that raised qualms over whether they meet EU rules.
US data surprises to the upside
US industrial production rose by 1.0% in September after a 0.2% drop a month earlier, higher than the 0.4% increase expected by analysts. Manufacturing output increased 0.5% last month, compared to a 0.5% fall in August and forecasts for a 0.3% gain.
US initial jobless claims advanced 264,000 in the week to 11 October, better than the 290,000 that was predicted by the market. It compares to 287,000 a week earlier.
Nestle, Man Group
Nestle declined as the company reported a 4.5% increase in nine-month sales excluding acquisitions.
Man Group rallied after the hedge-fund manager posted a 25% jump in assets under management in the third quarter.
Shire dropped after AbbVie asked shareholders to vote against its takeover of the company.
The euro fell 0.22% to $1.2810.