MW: European stocks narrow losses as oil swings higher
European stocks slipped Tuesday, but came off their worst levels as oil prices clawed back above $30 a barrel.
The Stoxx Europe 600 SXXP, -0.04% edged down 0.1% to 335.95. It briefly darted into positive territory as the oil and gas SXEP, +0.97% sector became the top performer after lagging the rest earlier in the day. The benchmark, at its lowest, was off as much as 2%.
Industrial, utility and financial shares also turned higher. Royal Philips NV PHIA, +6.47% shares surged 7% after the Dutch electronics heavyweight said operational performance continued to improve as it works toward the separation of its lighting division.
Oil shares showed improvement after oil prices reversed losses to trade above $30 a barrel. Oil’s swing higher came as two producers from the Organization of the Petroleum Exporting Countries hinted the cartel is ready to curb production if countries outside the group do the same.
Read more in Futures Movers.
West Texas Intermediate oil futures CLH6, +0.46% were up nearly 1% at $30.56 a barrel. Brent crude LCOH6, +0.26% the global benchmark, picked up 0.7% at $30.69 a barrel.
In the European oil group, producer Tullow Oil PLC TLW, +6.34% jumped 6%, Statoil ASA STL, +1.59% gained 1.8% while Spain’s Repsol SA REP, +2.06% tacked on 1.5%. Energy engineering and construction services provider Subsea 7 SA SUBC, +2.86% swung to a gain of 3%. Meanwhile, Italian oil contractor Saipem SPM, -7.26% fell 9% in the wake of a rights issue.
Oil prices earlier Tuesday tumbled nearly 4%, moves that contributed to a slide in Asian equity markets. The Shanghai Composite SHCOMP, -6.42% stumbled 6.4% for its worst close since November 2014. Energy stocks kicked Hong Kong’s Hang Seng Index HSI, -2.48% lower by 2.5%.
“The fresh stampede for the equity market is mainly due to the same old saga of oversupply of oil,” said Naeem Aslam, chief market analyst at AvaTrade, in a note.
But “what is really fretting traders” is the prospect of the U.S. Federal Reserve raising interest rates three or four times this year, said Aslam. “Although, under the current circumstances, we will not be amazed if they have to make a U-turn on their current stance,” he said.
The Federal Reserve will begin its two-day monetary policy meeting later Tuesday.
Read: Slight shifts in Fed statements often have big impact, analyst says
Indexes: As commodity shares came off session lows, the U.K’s FTSE 100 UKX, -0.20% pared its loss to 0.4% at 5,856.76. Germany’s DAX 30 DAX, +0.11% edged down 0.2% to 9,717.12. France’s CAC 40 PX1, +0.16% circled the flatline around 4,310.82.
The euro EURUSD, -0.1475% was buying $1.0826 compared with $1.0833 late Monday.
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