The Latest: European stock markets close lower
The Associated Press
Feb. 23, 2016
LONDON (AP) — The Latest on global financial markets (all times local):
European stocks have closed sharply lower after weak economic data soured investor sentiment.
Germany's DAX fell 1.6 percent to 9,416.77 and France's CAC 40 shed 1.4 percent to 4,238.42. Britain's FTSE 100 lost 1.3 percent to 5,962.31.
A drop in surveys of business confidence in Germany and France as well as a decline in U.S. consumer confidence all contributed to the retreat in stocks. The price of oil also fell back, with the U.S. benchmark down $1.64 at $31.75, after gains earlier this week.
U.S. stocks are posting sizeable losses an hour into the trading session after disappointing consumer confidence figures stoked some concerns about the economic outlook in the world's largest economy.
The Dow Jones industrial average is down 0.6 percent at 16,518 while the broader S&P 500 index is 0.7 percent lower at 1,932. Losses across Europe are broadly comparable heading toward the close.
Stocks in the U.S. haven't been helped by the news that U.S. consumer confidence, according to the Conference Board, fell in February to the lowest level in seven months.
U.S. stocks appear headed for a subdued opening following earlier weakness in Asia and Europe.
Dow futures and the broader S&P 500 futures are pointing to 0.1 percent decline at the bell. U.S. stocks, like others around the world, have enjoyed a rally over the past week or so. The recent strength has raised hopes that the turmoil of the early part of 2016 may now have come to an end.
Joshua Mahony, market analyst at IG in London, says that with each day of gains, "the feeling of anxiety is dissipating, with many starting to see this as a good entry point for long-term investments."
Much of the recent gains in stock markets have to do with rising oil prices amid signs that leading oil-exporting nations are mulling production cuts. On Tuesday, oil prices saw a modest reverse, with the benchmark New York rate down 40 cents at $32.99 a barrel. Earlier this month, it had fallen to 13-year lows around $26 a barrel.
The British pound isn't the only currency suffering in the wake of fears that the country may vote to leave the European Union in a referendum this June.
The euro, the currency used by 19 EU states, is also under pressure amid fears that a British exit will cause havoc — economically and politically — across the region.
Kit Juckes, global head of foreign exchange strategy at Societe Generale, says a British exit "would have negative growth implications for the rest of Europe, and more importantly could cause wider political uncertainty."
The euro has also been weighed down by soft economic data Tuesday, notably from Germany's Ifo Institute which reported that its closely watched confidence index is down for the third month running.
The euro is down 0.1 percent at $1.1015.
There's no sign of any let-up in the selling pressure on the British pound.
Fears that the country may vote to leave the European Union in a national vote in June have weighed heavily on the currency this week. On Tuesday, it's down 0.3 percent at $1.4107. On Monday, it had fallen to a 7-year low of $1.4058, before recovering.
FXTM Research Analyst Lukman Otunuga says "the pound may be left vulnerable and open to further losses moving forward" in light of the anxieties ahead of the referendum on June 23 and the economic uncertainties of a possible British exit from the EU.
Worries over the economic implications lay at the heart of a letter from nearly 200 business leaders in Britain that urged the country to back continued membership of the 28-country bloc.
In the letter published in The Times, the leaders say business "needs unrestricted access" to the European market in order to grow and invest.
The rally across European stock markets ran out of steam in early trading after a soft overnight performance in Asia and as oil prices weakened again.
Among the major indexes, Germany's DAX is trading 0.9 percent lower at 9,485, while the FTSE 100 index of leading British shares is down 0.7 percent at 5,996.
After last week's strong performance and Monday's big gains, most indexes in Europe remain well up from their recent lows.
However, Mike van Dulken, Head of Research at Accendo Markets, says Tuesday's soft start suggests that the recent momentum "has run its course and markets are in need of something else to get their teeth in to the drive us further north, or send us back south."