Oil price declines weigh on European markets | Reuters

 Oil price declines weigh on European markets
| Reuters

By Abhinav Ramnarayan

LONDON European shares fell on Wednesday 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 on Wednesday as investors grew increasingly doubtful that OPEC members will agree to cut output and as U.S. 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 U.S. 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.

Sterling rose 0.2 percent against the dollar to $1.2209, coming off Monday's trough of $1.2081, which was the lowest level since the Oct. 7 "flash crash". The euro, which slid to a 7 1/2-month low of $1.0851 on Tuesday, also rose on Wednesday and was up 0.32 percent to 1.0921 at 1100 GMT.With investors looking ahead to U.S. third-quarter gross domestic product data on Friday, the dollar index, which tracks the greenback against a basket of six global peers, fell 0.20 percent to 98.514.It hit its highest level since Feb. 1 on Tuesday as traders saw a better than 78 percent chance of an interest rise hike by the Federal Reserve in December, according to CME Group's FedWatch tool. (Reporting by Abhinav Ramnarayan, Additional reporting by Nichola Saminather and Ethan Lou)

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Updated Date: Oct 26, 2016 22:30:05 IST