European stocks retreated on Wednesday erasing earlier gains as investors reconsidered expectations of overly aggressive expansion of monetary stimulus program by the European Central Bank at policy meeting on Thursday. The Stoxx 600 index closed lower 0.02% at 384.17, Germany’s Dax 30 index fell 0.6% to 11190.02, weighed by a 2.5% loss for Volkswagen after the S&P downgraded automaker’s credit rating and said the outlook was negative with a likely lowering of the long-term corporate credit rating by one notch within the next one-to-two years. The euro slipped 0.2% to $1.0594 after preliminary inflation data showed euro-zone consumer prices rose 0.1% in November, below an expected gain of 0.2%-0.3%. The lower-than-expected inflation reinforced expectations the ECB will launch more stimulus measures today to bring inflation back to its target of just below 2%. Today from 09:45 to 10:00 CET final readings of November Services and Composite PMIs for France, Germany and euro-zone will be released. The tentative outlook is neutral. At 11:00 CET October Retail Sales will be released in euro-zone. The tentative outlook is positive. At 10:30 CET November Services and Composite PMIs will be released in UK. The tentative outlook is positive for the Pound. And at 13:45 CET European Central Bank rate decision will be announced followed by a news conference 45 minutes later. Market participants expect the ECB will expand its monetary stimulus program of bond purchases and cut the deposit rate.
Nikkei ended little changed today at 19,939.90 as investors were cautious to make big commitments before the European Central Bank's policy decision later in the day. The yen weakened against the dollar after hawkish comments from Federal Reserve Chair Janet Yellen.
Oil futures prices are edging up today after closing sharply lower on Wednesday as official data showed US crude inventories rose to 489.4 million barrels, the most for this time of year since 1930.
Gold slipped to a near-six-year low today after comments from Federal Reserve chair Janet Yellen reinforced the case for the rate hike this month, strengthening the dollar further. A stronger dollar makes dollar-denominated gold more expensive for holders of other currencies.
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