European markets closed lower on Wednesday as higher risk aversion persisted despite rising oil prices. The euro strengthened against the dollar, recording the largest gain in two months. The Stoxx Europe 600 index fell 1.5%, with financial stocks leading the decliners. As central banks around the world resort to more easing to stimulate slowing economies, the expectation of low interest rates for longer period weighs on financial companies’ earnings forecasts. Germany’s DAX 30 also closed down 1.5% at 9434.82 with rising euro hurting the prospects of export oriented industries. France’s CAC 40 lost 1.3%. Syngenta, the major Swiss seed-and-pesticide company, was among the advancers gaining 2.7% after announcing it has accepted China National Chemical Corp offer to buy the company for $43 billion in cash. In economic news, the euro-zone’s services PMI for January matched the initial reading of 53.6. Today at 09:00 CET ECB President Draghi will speak on economic policy in Frankfurt. At 10:00 CET the ECB Economic Bulletin will be published. At 10:15 CET January Retail Purchasing Manager’s Index will be released in euro-zone. And at 13:00 CET Bank of England will release its Rate Decision. No changes in monetary policy are expected and the central bank is expected to leave the interest rate at 0.5%. Governor Carney will speak at 13:45 CET at a press conference.
Nikkei closed 0.9% lower as investor confidence was undermined after several companies reported lower full-year forecasts and strengthening yen spurred concerns about deteriorating competitiveness of Japanese exporters. Car makers Toyota and Nissan fell 2.14% and 1.25% respectively. Sharp Corp jumped 17% on news the company has conferred preferred negotiating rights for takeover talks to Taiwan's Foxconn instead a Japanese state-backed fund.
Commodities are rising today following the rebound in oil. Copper, aluminum, nickel, lead and tin advance in London Metal Exchange, supporting a rally in mining stocks.
Oil futures prices are advancing today after closing sharply higher on news Russia is willing to meet with OPEC to talk about output cut and dollar weakened. March WTI jumped 8% to $32.28 a barrel on the New York Mercantile Exchange reversing much of over 11% loss in previous two sessions. Nevertheless, Energy Information Administration reported on Wednesday that US crude inventories rose by 7.8 million barrels to 502.7 million barrels, the highest level since 1980s, while crude production edged down by 7,000 barrels a day to 9.214 million barrels a day.
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