European Stocks Erase Gains on Weak US Economic Data

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European Stocks Erase Gains on Weak US Economic Data

European stocks closed on a choppy trading session down after weak US industrial data sent the Euro higher against the dollar weighing on exporters.

Having declined earlier in the day on a pledge by the ECB president Mario Draghi to continue the monetary stimulus, the common currency rallied in early afternoon trading after a report by the US Federal Reserve that showed US industrial production fell by lower than expected in April.

The Stoxx Europe 600 closed 0.4% lower at 396.5 points to end the week 0.9% lower mostly weighed down by bond volatility after yields hit their highest since November earlier in the week.

“Investors may be adjusting to the new level of bond yields,” Ian Williams, an economist and strategist at brokerage Peel Hunt, told the Wall Street Journal.

The benchmark index had opened in positive territory after the European Central Bank Chief underlined that the banks stimulus measures “will stay in place as long as needed for its objective to be fully achieved on a truly sustained basis.”

“After almost seven years of a debilitating sequence of crises, firms and households are very hesitant to take on economic risk,” Yahoo News reports on Draghi’s speech at the International Monetary Fund forum.

“For this reason quite some time is needed before we can declare success, and our monetary policy stimulus will stay in place as long as needed for its objective to be fully achieved on a truly sustained basis,” he said.

However, in early afternoon trading, the pan European index, along with most state specific indexes, was sent tumbling down after US data showed that consumer sentiment in the US was at a 7 month low in May.

Germany’s benchmark DAX 30 Index declined by 1% to 11,447.03 while the UK benchmark FTSE 100 ended 0.2% lower at 6960.49 points.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com