European Stocks Steady Monday Despite Deflation Fears

(RTTNews) - European stocks steadied Monday, but gains were tempered by skepticism about the European Central Bank's promise of further measures to bolster the region's sluggish economy.

Analysts say the euro area is on the verge of recession, thanks in large part to weakness in Europe's economic mainstay Germany, where exports have fallen sharply in recent months.

Headwinds to economic growth include a slowdown in demand from China, sanctions against Russia for its role in the Ukraine crisis, as well as the threat of deflationary a deflationary spiral.

The ECB announced some stimulus measures over the summer but markets fear that policy makers are not doing enough to prevent a deflation disaster.

A recent Bloomber poll showed three out of four global investors expressed fears the euro zone was slipping into deflation, and official today revealed Germany's wholesale prices declined at a faster rate in September.

Wholesale prices fell 0.9 percent year-over-year in September following the 0.6 percent fall in August. This marked the fifteenth consecutive month of drop in prices.

Despite the gloomy outlook for Europe, markets enjoyed a modest lift from comments over the weekend by Federal Reserve officials hinting they may delay rate hikes if the weak global economy threatens U.S. growth.

At last check, the Euro Stoxx 50 index of eurozone bluechip stocks was up 0.16 percent. However, heavy losses over the past few weeks have pulled the index into negative territory for the year-to-date.

The German DAX added 0.27 percent and the French CAC 40 gained 0.12 percent. The FTSE 100 index of the U.K. rose 0.41 percent, while Switzerland's SMI inched lower.

Large banks were mixed ahead of this week's run of earnings from major U.S. rivals including Citigroup JPMorgan Chase, and Wells Fargo.

Commerzbank added 1.5 percent, while Deutche Bank was slightly negative.

Mining stocks performed well on upbeat economic data out of China. Anglo American rose 4.5 percent, Randgold and Rio Tinto gained 4.3 percent, and BHP Billiton added 2.6 percent.

Fraport, which reported increase in passengers for September, is moderately higher.

Infineon Technologies fell 1.8 percent amid apprehensions about the semiconductor industry. JPMorgan cut the stock to "Neutral" from "Overweight." ARM Holdings lost 2.7 percent.

Smith & Nephew lost 1.4 percent, after the firm said a Phase 3 study of HP802-247 in North America for leg ulcers treatment did not meet primary endpoint.

Luxottica Group shed 9 percent in Milan, after its chief executive resigned.

Statoil, which announced a $2.2 billion worth divestment, rose 1.2 percent in Oslo.