EUR News

European Stocks Extend Losses, eyes on Fed;DAX Down 1%

Investing.com - European stocks extended losses on Tuesday, as speculation the Federal Reserve could soon begin tapering its monthly asset purchases continued to weigh on equity markets.

During European afternoon trade, the EURO STOXX 50 plummeted 1.20%, France’s CAC 40 declined 1.65%, while Germany’s DAX 30 tumbled 1%.

Speculation over the future of the Fed's stimulus program persisted after the Institute for Supply Management said Monday that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in November, fuelling optimism over the economic recovery.

The ISM manufacturing purchasing managers’ index rose to 57.3 in November from 56.4 in October. Analysts had expected the index to fall to 55.0.

In the euro zone, official data earlier showed that the number of unemployed people in Spain declined by 2,500 in November, confounding expectations for an increase of 44,300, after a 87,000 climb the previous month.

Financial stocks were broadly lower, as French lenders BNP Paribas and Societe Generale plummeted 1.87% and 1.56%, while Germany's Deutsche Bank declined 0.91%.

Among peripheral lenders, Spanish banks BBVA and Banco Santander retreated 0.71% and 1% respectively, while Italy's Intesa Sanpaolo and Unicredit slid 0.37% and 0.71%.

Elsewhere, ThyssenKrupp plunged 2.68% after raising EUR882.3 million through a share sale.

Adding to losses, Sonova Holding plummeted 1.60% as Morgan Stanley cut its rating on the Swiss hearing-aid maker to "equal weight" from "overweight".

In London, commodity-heavy FTSE 100 slid 0.87%, weighed by sharp losses in mining stocks.

Shares in Glencore Xsrata tumbled 1.90% and Fresnillo plummeted 3.62%, while rivals Randgold Resources and Antofogasta lost 5.35% and 5.48% respectively.

Meanwhile, financial stocks were mixed. Barclays and HSBC Holdings dropped 0.89% and 1.11%, while Lloyds Banking and the Royal Bank of Scotland added 0.08% and 0.49%.

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.41% decline, S&P 500 futures signaled a 0.32% slide, while the Nasdaq 100 futures indicated a 0.19% fall.

Retail sales figures from the Eurozone and detailed data on the region's third quarter gross domestic product are the major European economic news on tap for Wednesday. At 3 am ET, the Hungarian Central Statistical Office is scheduled to release the final third quarter GDP and retail sales data. Preliminary GDP figures from Romania are also due at the same time.

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The Eurozone finance ministers said on Monday that Greece's creditors are unlikely to conclude the ongoing review of the country's fiscal adjustment program in December as more progress is required on the already agreed measures. The Troika comprising the International Monetary Fund, the European Union and the European Central Bank will return to Athens on Tuesday.

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European finance ministers on Tuesday took one step further in finalizing an agreement on a joint mechanism to deal with failing banks, despite visible divisions among member countries over the key measures of the plan. Though the ministers failed to arrive at a precise agreement on Tuesday's meeting, they appeared keen to finalize the banking resolution plan before the EU leaders meeting.

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European Central Bank Governing Council member Ewald Nowotny said on Wednesday that there are limits to what monetary policy can do to boost credit development.

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German Finance Minister Wolfgang Schaeuble said on Monday that it would be a good idea to consider Bundesbank Vice President Sabine Lautenschlaeger as the replacement for Joerg Asmussen on the European Central Bank's Executive Board.

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Greece's central bank said on Tuesday that the country's economy is set to exit a six-year long recession and start recovering next year.

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European Union finance ministers on Wednesday struck a deal on a much-awaited scheme to handle bank failures in the region, ahead of EU leaders' summit in Brussels on Thursday. The ministers agreed to set up a EUR 55 billion-single resolution fund over the next 10 years, financed by bank levies raised at national level. The fund will be backed by a new agency.

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EUR/USD weekly outlook: December 23 - 27

Monday, December 23

The U.S. is to produce government data on personal spending and expenditure, while the University of Michigan is to release revised data on consumer sentiment and inflation expectations.

Tuesday, December 24

Markets in Germany will remain closed in observance of Christmas Eve, while France is to release data on consumer spending.

The U.S. is to release data on durable goods orders, a leading indicator of production, as well as a report on new home sales.

Wednesday, December 25

Markets in Europe and the U.S. will remain closed for the Christmas Day holiday.

Thursday, December 26

Markets in Europe will remain closed in observance of Boxing Day.

Meanwhile, the U.S. is to release weekly data on initial jobless claims.

Friday, December 27

The U.S. is to round up the week with a report on crude oil supplies.

The Italian economy may be exiting recession signaled by a strong turnaround in confidence indicators, but downside risks remain, European Central Bank Executive Board member Peter Praet said on Sunday.

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