European Markets Dropped On Weak Confidence Data

(RTTNews) - The European markets ended Thursday's session solidly in the red. Disappointing economic data was largely responsible for the drop, with Eurozone economic confidence falling to a 5-month low. The sharp drop in U.S. durable goods orders also had investors concerned.

Investors were in a negative mood early, after another drop in the Chinese stock market. China's Shanghai Composite index fell nearly 3 percent, taking losses this month to about 25 percent and almost 50 percent over the last six months.

Investors had their first opportunity to react to yesterday's announcement from the Federal Reserve. The Fed made no change to monetary policy, a month after raising interest rates for the first time in nearly a decade. In keeping the benchmark interest rate near 0.25 percent, the Federal Open Market Committee acknowledged economic weakness overseas, particularly China, is a threat to the U.S. recovery. The Fed did not completely rule out a rate hike at its next meeting in March.

Crude oil prices climbed back above $33 per barrel on speculation that OPEC may be willing to curb supply. Russian officials have hinted at possible coordination with Saudi Arabia and other OPEC countries on output cuts to arrest the decline in prices.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 2.10 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.90 percent.

The DAX of Germany dropped 2.44 percent and the CAC 40 of France fell 1.33 percent. The FTSE of the U.K. declined 0.98 percent and the SMI of Switzerland finished lower by 2.04 percent.

In Frankfurt, Deutsche Bank fell 5.44 percent. The lender posted a net loss of 6.8 billion euros for 2015, hurt by legal costs and weak bond trading at its investment bank.

Metro surrendered 3.83 percent, after JP Morgan downgraded its rating on the stock to "Underweight" from "Neutral."

Merck sank 5.12 percent and Bayer weakened by 3.24 percent.

In Paris, EDF climbed 1.23 percent. The electric utility has approved a 5 billion euro capital increase after agreeing on the final valuation of AREVA NP activities to be acquired by the company.

Societe Generale decreased 3.32 percent and Credit Agricole lost 2.81 percent. BNP Paribas also finished lower by 2.82 percent.

Technip increased 6.15 percent and Total added 0.16 percent.

In London, Diageo declined 1.37 percent, after its first-half profit growth fell short of expectations.

Tullow Oil soared 6.93 percent and Royal Dutch Shell advanced 2.19 percent as oil prices steadied above $33 a barrel on speculation that large producers may be inching closer to a collective cut.

BG Group rose 1.41 percent after its shareholders approved the company's combination with Royal Dutch Shell.

Anglo American surged 8.73 percent after saying copper production has increased 23 percent in the fourth quarter.

Roche dropped 3.84 percent in Zurich, after its full-year earnings came in slightly below forecasts.

Hennes & Mauritz decreased 4.76 percent in Stockholm. The company reported fourth-quarter profit after tax of 5.53 billion Swedish kronor, down from 6.22 billion kronor in the same period last year. Earnings per share were 3.34 krona compared to 3.76 krona in the year-ago period.

Eurozone economic confidence deteriorated more-than-expected to a five-month low in January as the stock market turmoil and slowdown in China weighed on sentiment across all sub-sectors. The economic confidence index dropped to 105 in January from a revised 106.7 in December, survey results from European Commission showed Thursday.

The reading was forecast to fall marginally to 106.4. This was the lowest score since August, when the reading was 104.

Germany's consumer prices rose at the fastest pace in eight months during January, exceeding economists' expectations, preliminary data from Destatis showed Thursday. The consumer price index climbed 0.5 percent year-on-year following 0.3 percent increase in December. Economists had forecast 0.4 percent rise.

Germany's imports prices declined at the weakest pace in four months during December, figures from Destatis showed Thursday. The import price index fell 3.1 percent year-on-year following a 3.5 percent slump in November. Economists had forecast a 3 percent decline.

Export prices, meanwhile, rose 0.2 percent year-on-year in December after a 0.3 percent increase in the previous month.

The U.K. economy grew at a slightly faster pace in the fourth quarter of 2015, relying entirely on the service sector. The overall growth remained lackluster, trending below quarterly rates of 2014, and annual growth was the weakest in nearly three years.

Gross domestic product climbed 0.5 percent sequentially in the fourth quarter last year, slightly faster than the 0.4 percent expansion posted in the previous three months, preliminary estimate from the Office for National Statistics showed Thursday. The growth rate matched economists' consensus.

UK retail sales volumes declined at the start of the year and orders placed by retailers declined at the fastest pace since May 2013, results of a survey by the Confederation of British Industry showed Thursday.

The monthly Distributive Trends Survey of the CBI gave a sales balance of +16, which was lower than the +19 in December. Economists had forecast a balance of 18.

Partly reflecting a sharp drop in aircraft demand, the Commerce Department released a report on Thursday showing a substantial decrease in new orders for U.S. manufactured durable goods in the month of December.

The Commerce Department said durable goods orders plunged by 5.1 percent in December compared to the 0.6 percent drop expected by economists. The flat reading originally reported for November was also revised to a 0.5 percent decrease.

After reporting first-time claims for U.S. unemployment benefits at a six-month high in the previous week, the Labor Department released a report on Thursday showing a bigger than expected pullback in initial jobless claims in the week ended January 23rd.

The report said initial jobless claims fell to 278,000, a decrease of 16,000 from the previous week's revised level of 294,000. Economists had expected jobless claims to pull back to 285,000 from the 293,000 originally reported for the previous week.

Pending home sales in the U.S. inched slightly higher in the month of December, the National Association of Realtors revealed in a report on Thursday. NAR said its pending home sales inched up 0.1 percent to 106.8 in December from a downwardly revised 106.7 in November. Economists had expected the index to climb by 0.8 percent.