Sun, Oct 15, 2017 - Page 14 News List

European markets slide amid stronger euro due to subdued US inflation data

AFP, LONDON

Europe’s major stock markets eased on Friday, weighed down by a firmer euro after inflation data in the US showed that price pressures remained subdued in the world’s biggest economy, dealers said.

After holding steady for most of the session, all of Europe’s main stock indices fell into the red in the afternoon following the release of new inflation data in the US.

On the face of it, soaring fuel prices drove US inflation to an eight-month high last month, but the spike in gasoline prices was likely tied to Hurricane Harvey.

Stripped of such volatile factors, core inflation remained tame, the data showed.

The US dollar fell as a result, pushing stock prices on Wall Street tentatively higher.

However, in Frankfurt, Germany, the blue-chip DAX, which topped the 13,000-point mark on Thursday, was flat on Friday, closing at 12,991.87. That was an increase of 0.3 percent from a close of 12,955.94 on Oct. 6.

In Paris, the CAC 40 on Friday shed 0.2 percent to close at 5,351.74, falling 0.15 percent from 5,359.90 a week earlier.

London’s benchmark FTSE 100 lost 0.3 percent, after hitting a record closing peak the previous day with traders gripped by Brexit news. It closed at 7,535.44 on Friday, rising 0.2 percent from 7,522.87 on Oct. 6.

“The tired [US] dollar collapsed like a house of cards on Friday, after US CPI [consumer price index] figures and retail sales for September failed to pack a punch,” FXTM analyst Lukman Otunuga said.

“Although US consumer prices rose 0.5 percent, the largest increase seen in eight months on the back of rising gasoline prices, underlying inflation remained subdued. While markets are still expecting the [US] Federal Reserve to raise interest rates in December, concerns over prolonged periods of depressed inflation may cloud the prospect of higher US interest rates in 2018,” the expert said.

London stocks had been catapulted on Thursday to an all-time high on the weak pound, which boosts earnings of exporters.

Sterling initially sank after European Chief Negotiator for the UK Exiting the EU Michel Barnier warned that Britain and Brussels are stuck in a “disturbing” deadlock over a Brexit divorce bill.

However, the currency then rebounded as German newspaper Handelsblatt reported that Britain could be given a two-year extension to complete Brexit.

The British unit continued to regain its composure on Friday.

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