European Markets Pared Losses In Late Trade, But Finished Lower

(RTTNews) - The European markets were firmly in negative territory in early trade Thursday, following weak cues from Asia and Wall Street overnight. However, the markets pared their losses in late trade, after the U.S. markets bounce back from early weakness. The U.S. rebound occurred after crude oil prices began to climb. Markets in Europe still finished in the red Thursday, but well off their session lows.

Rate-setters were divided on the size of the interest rate reduction during the December policy session and they explored the possibility of further easing in future, the minutes of the meeting, released Thursday by the European Central Bank, showed.

"Some members expressed a preference for a 20 basis point cut in the deposit facility rate at the current meeting, mainly with a view to strengthening the easing impact of this measure and reflecting the view that, to date, no material negative side effects on bank margins and financial stability had emerged," the minutes of the December 3 meeting, said.

On December 3, the bank cut its deposit facility rate by 10 basis points to a record low -0.30 percent. The size of the reduction was at the lower end of the 10-20 basis points cut economists had forecast.

The minutes said some members were cautious regarding a deeper rate cut as they felt it will increase the side effects over time.

"A cut in the deposit facility rate of 10 basis points was seen as unlikely to trigger material negative side effects and was also seen as having the advantage of leaving some room for further downward adjustments, should the need arise," the report said.

The Bank of England maintained its record low interest rate and quantitative easing unchanged as expected, on Thursday.

Policymakers observed that downside risks to global growth and the recent decline in oil prices could depress the near-term inflation outlook.

The Monetary Policy Committee, governed by Mark Carney, voted 8-1 to keep the interest rate unchanged at 0.50 percent. The rate has been at the current record low level since early 2009.

The MPC voted unanimously to retain the asset purchase plan at GBP 375 billion.

Ian McCafferty has been the sole dissenter since August, seeking a 25 basis points rate hike, suggesting that the majority of policymakers are in no hurry to tighten monetary policy.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.60 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.95 percent.

The DAX of Germany declined 1.67 percent and the CAC 40 of France fell 1.80 percent. The FTSE of the U.K. dropped 0.72 percent and the SMI of Switzerland finished lower by 1.30 percent.

In Frankfurt, Deutsche Bank dropped 3.76 percent and Commerzbank fell 2.59 percent.

BMW decreased 3.31 percent and Daimler lost 3.22 percent. Volkswagen also finished lower by 3.40 percent.

In Paris, Renault declined 10.28 percent after French authorities raided several of its facilities in connection with an emissions probe. Peugeot fell 5.05 percent and Valeo surrendered 4.02 percent.

BNP Paribas weakened by 3.60 percent and Societe Generale lost 3.45 percent. Total climbed 2.59 percent and Technip rose 0.96 percent.

In London, Tesco surged 6.13 percent after it reported holiday sales.

Burberry gained 0.81 percent. The company said its retail sales increased 1 percent underlying in a challenging environment for luxury.

Restaurant Group plunged 18.18 percent. The company stated that the trading environment for many consumer facing businesses has been tougher in recent months than it was earlier in 2015. This has caused like-for-like sales growth to trend lower and accordingly the firm is more cautious than previously on the outlook for 2016.

Intercontinental Hotels Group dropped 7.19 percent after Citigroup downgraded its rating to "Neutral"

Anglo American surged 13.61 percent and Glencore leaped 9.39 percent. BHP Billiton gained 6.04 percent and Rio Tinto advanced 3.06 percent.

Royal Dutch Shell increased 3.38 percent and BP climbed 3.53 percent. BG Group rose 2.94 percent and Tullow Oil jumped 7.68 percent.

Cartier owner Richemont, which reported third-quarter sales, fell 1.22 percent in Zurich.

Lundin Petroleum soared 19.48 percent in Stockholm, after Statoil acquired a minority stake in the company.

Fiat Chrysler sank 7.94 percent in Milan. Two dealerships have reportedly filed lawsuits against the company on accusations that it inflated U.S. sales.

The German economy grew the most in four years in 2015 as feeble inflation, record low unemployment and wage growth boosted household spending. Gross domestic product advanced 1.7 percent after expanding 1.6 percent in the previous year, Destatis said Thursday. This was the fastest growth since 2011, when GDP climbed 3.7 percent.

Germany's wholesale prices continued to fall in December but the pace of decline slowed further, Destatis reported Thursday. Wholesale prices decreased 1 percent year-on-year in December, slower than the 1.1 percent drop seen in November. Nonetheless, the index has been falling since July 2013.

First-time claims for U.S. unemployment benefits unexpectedly increased in the week ended January 9th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims climbed to 284,000, an increase of 7,000 from the previous week's unrevised level of 277,000. Economists had expected jobless claims to edge down to 275,000.

While the Labor Department released a report on Thursday showing a significant drop in U.S. import prices in the month of December, the decrease was not quite as steep as economists had anticipated.

The Labor Department said import prices tumbled by 1.2 percent in December after falling by a revised 0.5 percent in November. Economists had expected import prices to slump by 1.4 percent compared to the 0.4 percent drop originally reported for the previous month.

The report also said export prices slid by 1.1 percent in December following a revised 0.7 percent decrease in November. Export prices had been expected to dip by 0.5 percent compared to the 0.6 percent decrease originally reported for the previous month.