European Markets Dropped On Reports That ECB Considering Bond Purchases

(RTTNews) - The European markets finished solidly in negative territory on Friday, following the gains of the previous 2 sessions. A number of factors weighed on investor sentiment at the end of this volatile trading week. Weak German industrial production data and the mixed results of the U.S. December jobs report had an impact. Bloomberg also reported that the European Central Bank is considering up to 500 billion euros worth of bond purchases.

The highly anticipated U.S. jobs report for December was released this morning and while employment grew more than expected, investors were disappointed by a slowdown in wage growth.

The U.S. Labor Department announced that non-farm payroll employment climbed by 252,000 jobs in December, compared to expectations for an increase of about 245,000 jobs.

The stronger than expected job growth helped to push the unemployment rate down to 5.6 percent in December from 5.8 percent in November. Economists had expected the unemployment rate to dip to 5.7 percent. The bigger than expected drop pulled the rate down to its lowest level since June of 2008.

However, despite the continued job growth, the report also said average hourly employee earnings fell by $0.05 to $24.57 in December. The annual rate of average hourly earnings growth slowed to 1.7 percent in December, the slowest rate of growth since October of 2012.

The mixed results from the employment report painted a mixed picture regarding the outlook for monetary policy. Chicago Federal Reserve President Charles Evans on Friday said the central bank should be patient on raising interest rates due to concerns about low inflation and declining U.S. wages. Evans stated in a CNBC interview that he would not start raising rates from zero before 2016.

German industrial production and exports declined in November suggesting that the economy struggles to achieve a sustainable recovery.

Due to a sharp fall in energy production, industrial output was down unexpectedly by 0.1 percent in November from October, the first fall in three months, Destatis reported Friday. Economists had forecast a 0.3 percent rise following October's 0.6 percent growth.

Exports decreased at a faster than expected pace while imports rebounded in November from the prior month, the Destatis said. Exports fell 2.1 percent month-on-month in November, faster than the 0.5 percent drop in October. Economists had forecast a 1 percent decline.

At the same time, imports recovered by 1.5 percent after decreasing 3.3 percent a month ago. Imports were expected to rise 0.5 percent. The trade surplus narrowed to around a seasonally adjusted EUR 17.7 billion from EUR 20.8 billion in October.

U.K. industrial production fell marginally in November due to a slump in oil and gas extraction, while manufacturing rebounded from the prior month, the Office for National Statistics showed Friday. Industrial production dropped unexpectedly 0.1 percent from October, when output decreased 0.3 percent. Economists had forecast industrial output to grow 0.2 percent.

U.K. construction output declined unexpectedly in November due to declines in all new work and repair and maintenance, data from the Office for National Statistics revealed Friday. Construction output fell 2 percent from October, while economists forecast a 1.2 percent increase. Output was down 1.9 percent in October.

Another report from ONS revealed that the visible trade gap fell to GBP 8.8 billion in November, the lowest since last March, from GBP 9.8 billion in October. It was expected to decrease to GBP 9.5 billion.

French industrial and manufacturing production declined for the second straight month in November, the statistical office Insee showed Friday. Industrial production fell unexpectedly 0.3 percent from October, but the rate of decline slowed from the 0.7 percent fall seen in October. Economists had forecast 0.3 percent rise.

France's merchandise trade deficit for November narrowed more-than-expected from a year ago, figures from the French Customs showed Friday. The merchandise trade deficit fell to EUR 3.23 billion from EUR 5.79 billion in the same month of 2013. Economists had forecast a shortfall of EUR 4.50 billion.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased by 3.13 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.99 percent.

The DAX of Germany dropped by 1.92 percent and the CAC 40 of France fell by 1.90 percent. The FTSE 100 of the U.K. declined by 1.05 percent and the SMI of Switzerland dipped by 0.37 percent.

In Frankfurt, Merck climbed by 0.80 percent. Credit Suisse raised the stock to "Outperform" from "Neutral."

Goldman Sachs raised United Internet to "Conviction Buy List" from "Buy." The stock increased by 3.20 percent.

RWE declined by 3.90 percent and E.ON fell by 3.66 percent.

Deutsche Bank dropped by 2.35 percent and Commerzbank lost 3.07 percent.

In Paris, Sodexo fell by 1.95 percent, after it reported first quarter revenues.

Credit Agricole declined by 2.28 percent and BNP Paribas fell by 3.36 percent. Societe Generale also dipped by 1.12 percent.

Total dropped by 3.15 percent and Technip lost 1.30 percent.

In London, Barclays decreased by 2.55 percent and HSBC fell by 0.69 percent. Royal Bank of Scotland declined by 2.65 percent and Lloyds Banking dropped by 0.49 percent.

BP finished lower by 1.57 percent and Royal Dutch Shell declined by 1.68 percent.

Housing stocks Taylor Wimpey, Barratt Developments and Persimmon dropped between 5 percent and 6 percent after a downgrade of the sector by Jefferies.

In Zurich, Roche fell by 1.38 percent. UBS downgraded its rating on the pharma giant to "Neutral" from "Buy."

Banco Santander sank by 14.09 percent in Madrid. The company increased its capital through a sale of 1.2 billion shares.