European stocks post biggest fall in three weeks

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LONDON: European stocks saw their biggest fall in three weeks on Thursday and currency markets were noticeably subdued as investors took to sidelines ahead of one of the big global central banker gatherings of the year.

Japanese and Chinese stocks had suffered modest drops in Asia and the pace picked up in Europe as London’s FTSE sank 0.4 percent and Frankfurt and Paris lost as much as 1.2 percent in a region-wide slide.

Wall Street was also set for an all-red start for its main S&P 500 ESc1, Dow 1YMc1 and Nasdaq NQc1 indexes where weekly jobless claims, big ticket goods and Markit PMI data is on the slate.

Stubbornly low oil prices and warnings about steel demand kept the pressure on miners in Europe, though it was a near 2 percent drop from pharma stocks that caused the most pain after US presidential candidate Hilary Clinton had chastised industry price hikes on social media.

The wobbles saw some demand for bonds return. Treasury yields dipped to 1.55 percent ahead of US trading though Europe struggled to hold on to its early progress that had been helped by a deal to recapitalize ailing state-owned Portuguese bank Caixa Geral de Depositos.

According to DZ Bank strategist, Daniel Lenz,”The recapitalisation of CGD is likely to have implications for Portugal’s budget, but all in all it is positive.”

He further added that it’s better to have a stable banking sector. Currency markets, meanwhile, were firmly focused on the annual central banker mountain getaway in Jackson Hole in Wyoming that starts later and will see Federal Reserve chief Janet Yellen speak on Friday.

The dollar, which is looking for any signal on whether US interest rates will rise this year, drifted down to $1.1283 to the euro and was flat on the yen at 100.40 yen.

On the data front, there was downbeat news from Europe’s biggest economy Germany. The closely followed Ifo survey showed an unexpected deterioration in business morale as the institute also warned that Brexit uncertainty was taking its toll.

Source: Agencies

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