LONDON: European shares fell yesterday maintaining a gloomy trend set in Asia and the United States, and with concerns about a global glut of oil looming over the market.
Mixed results from the continent’s banking sector and losses in the mining sector pushed the pan-European STOXX 600 index down 0.6 percent.
The losses came after oil prices fell 1.18 percent yesterday as investors grew increasingly doubtful that Opec members will agree to cut output and as US inventories staged a surprisingly large increase.
Brent crude futures were down 73 cents at 1100 GMT, closing in on $50 a barrel for the first time in three weeks.
“There have been rumours that Russia may not be on board with the production cuts and Iraq is also apparently seeking an exemption. The market is starting to question whether the Opec agreement reached a couple of weeks ago is really as solid as originally thought,” Investec economist Ryan Djajasaputra said.
Iraq, Opec’s second biggest oil producer, wants to be exempt from the cut, arguing it needs the revenues to fight Islamic State.
Another factor behind European and Asian stock price weakness was disappointing results and forecasts from US companies on Tuesday - most notably with Apple recording declining iPhones sales.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.87 percent, while Japan’s Nikkei reversed earlier losses to close up 0.15 percent as the yen pulled back. European equities were also edgy as investors digested a slew of earnings reports, with commodity-related stocks and with British bank Lloyds under pressure, though well-received results from Santander buoyed Spanish stocks. Antofagasta led the losses in the mining sector, dropping 6.5 percent.
In currency markets, sterling recovered from Monday’s lows after Bank of England (BoE) governor Mark Carney said in a speech the central bank could not ignore the effect of sterling’s slide on inflation.
This increased expectations that policymakers would leave rates unchanged next week, rather than cut them as many had expected.
