Europe markets fail to rebound on oil …

European stock markets closed lower yesterday, unable to recover from the previous day’s slump as tumbling oil prices and fears of a Greek exit from the eurozone continued to rattle investors.
The euro traded around nine-year low points before stabilising as investors wait to see what action the European Central Bank will take to stimulate the eurozone economy which is being undermined by slowing inflation.
London’s benchmark FTSE 100 index closed 0.79% lower to stand at 6,366.51 points, also weighed down by data showing Britain’s services sector grew at its slowest rate for 19 months in December.
Frankfurt’s DAX 30 dipped 0.04% to close at 4,083.50 points and the CAC 40 in Paris lost 0.68% to end the day at 4,083.50, giving up gains earlier in the trading day.
European equities had plunged Monday over the impact of the political turmoil in Greece on the eurozone and as the euro struck near nine-year lows against the dollar with the European Central Bank appearing on course to further prop up the single currency.
Europe’s sharp losses were felt by US markets on Monday and across Asian and Middle East indices Tuesday.
US stocks continued falling yesterday after the previous day’s rout, with the Dow Jones Industrial Average down 1.03% to 17,321.51 in midday trading.
The broad-based S&P 500 shed 0.98% to 2,000.76, while the tech-rich Nasdaq Composite Index dropped 1.60% to 4,577.99.
The first full week of the new year got off to a traumatic start for dealers as they bet that a January 25 general election in Greece would see the left-wing Syriza party come out on top in the polls.
Markets fear the party will roll back austerity measures required under the IMF-EU bailout of the country, which could in turn lead to Greece leaving the eurozone.
In foreign exchange trading, the euro stabilised to $1.1934 on Tuesday from $1.1933 late in New York on Monday. The single currency had begun the week by tumbling to $1.1864 – the lowest level since March 2006.
Remarks by ECB chief Mario Draghi that deflation was a threat to the eurozone and that the ECB must be prepared to counter it and caused the euro to slide in recent days.
The central bank is currently examining the possibility of large-scale purchases of sovereign debt, so-called “quantitative easing” or “QE”, to help jump-start the eurozone economy.
But the euro outlook remains weak “as poor eurozone growth, the implementation of quantitative easing and fears for the region’s indebted economies suggest that the currency is set for a sustained period of weakness that will probably see it fall to levels not seen since shortly after its introduction,” said Jennifer McKeown, senior European economist at Capital Economics.
Market sentiment was also being dragged down also by plunging oil prices, which hit fresh 5.5 year lows.
Investment bank Evercore IS said yesterday the global oil industry was headed for a “sharp recession” as the price fall will lead energy companies to slash capital spending in North America, Europe and Asia.
With the ECB primed to act and amid fears over the prospect of Greece leaving the eurozone, investors tried to lock into relatively safe-haven investments such as French and German government bonds. Source: AFP, Gulf Times