European stocks were little changed, posting their best monthly advance since February, even as a slump in energy companies offset a gain in travel shares.
The STOXX Europe 600 Index slipped 0.1 percent to 347.25 at the close on Friday, paring losses of as much as 0.6 percent in the final half hour of trading.
A gauge of oil and gas companies fell 3.5 percent, capping its worst week since August 2011, as Brent and West Texas Intermediate headed for their biggest weekly drops since 2011. Air France-KLM Group rose 6.4 percent, leading an index of travel shares to its highest level in more than seven years on expectations that lower fuel costs would boost profitability.
“OPEC’s decision yesterday [Thursday] came as a surprise when looking at the market reaction, and made investors more cautious,” said Tobias Britsch, who helps oversee about US$30 billion at Meriten Investment Management GmbH, in Dusseldorf, Germany. “This could hurt a year-end rally. I would not touch oil and gas stocks as it’s far too risky now.”
Europe’s equity benchmark gained 3.1 percent this month, as European Central Bank (ECB) President Mario Draghi said the bank might broaden its asset-buying program to include the purchase of government bonds, while central banks in Japan and China stepped up measures to support their economies.
The STOXX 600 is 0.7 percent off its June peak, which was the highest level since January 2008. Germany’s DAX rose 0.1 percent on Friday, its 12th straight gain and longest winning streak since May last year. National benchmark gauges climbed in 10 of the 18 western European markets. The UK’s FTSE 100 slipped less than 0.1 percent, while France’s CAC 40 gained 0.2 percent.
Investors are also weighing the prospects for increased stimulus before the ECB meets next week to discuss monetary policy. Euro-area inflation slowed to 0.3 percent this month from a year earlier, according to EU data. The rate has been below 1 percent since September last year. The ECB has pledged more stimulus if needed to revive consumer prices.
“Lower energy prices could put some pressure on euro-area inflation and the ECB might need to go for full QE,” Britsch said, referring to quantitative easing.
A separate release showed unemployment in the region held at 11.5 percent last month.
Energy stocks extended a five-day decline to 9.4 percent after the 12-nation OPEC kept its output target unchanged on Thursday. Statoil ASA dropped 7.3 percent to its lowest price in 15 months, while Total SA slid 2 percent. BG Group PLC slipped 8.8 percent to its lowest price since March 2009.
The gauge of oil and gas firms on the STOXX 600 posted its third straight monthly drop, its longest losing streak in almost two years.
Travel and leisure stocks rose, extending a two-day advance to 3.3 percent. Deutsche Lufthansa AG gained 4.9 percent as UBS Group AG recommended buying the shares.
Aurubis AG dropped 3.2 percent after Goldman Sachs Group Inc cut its rating on Europe’s biggest producer of refined copper to neutral from buy. Ingenico Group rose 3.1 percent after Morgan Stanley upgraded its recommendation on the French maker of payment terminals.
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