LONDON: Eurozone stock markets slid Wednesday after strong gains the previous session, as Russia downplayed hopes of a breakthrough in peace talks with Ukraine and Germany’s growth outlook darkened.
Outside the eurozone, London’s main stocks index flattened after a mixed showing in Asia.
Surging oil prices, which have been a driver of decades-high inflation, were up more than 1.5 percent on lingering supply worries caused by the Ukraine war.
Analysts said there was an expectation that OPEC and other major producers including Russia would decide against lifting output at their monthly meeting Thursday.
“Hopes of a speedy resolution to the Russia-Ukraine conflict have been dashed again, with scepticism surrounding the latest reports of a slowdown of the Russian aggression,” noted Richard Hunter, head of markets at Interactive Investor.
“The oil price has therefore risen once more.”
Russia’s pledge to “radically” wind down military activity around two cities including Kyiv, had sparked Tuesday a rally on US and European markets while sending oil prices tumbling.
The excitement has been tempered after world leaders greeted the news with scepticism, with US President Joe Biden saying he wanted to see if Moscow would “follow through” on a promise to de-escalate.
Moscow on Wednesday played down hopes of a breakthrough following the talks in Istanbul.
“We cannot state that there was anything too promising or any breakthroughs,” Kremlin spokesman Dmitry Peskov told reporters. “There is a lot of work to be done.”
Tuesday’s strong gains on Wall Street and in Europe were largely matched in Asia on Wednesday.
Frankfurt though lost 1.5 percent, as Germany slashed its economic growth forecast for 2022, warning that the war in Ukraine and soaring energy prices would take a toll on Europe’s biggest economy.
European shares join global rally
The German government’s economic advisers said it expected gross domestic product to expand 1.8 percent year-on-year, down from a forecast of 4.6 percent.
“Russia’s war of aggression against Ukraine and energy prices are drastically worsening the economic outlook,” said the German Council of Economic Experts.
Inflation in eurozone member Spain has surged to a near 37-year high, official data showed Wednesday.
The rate jumped to 9.8 percent in March from 7.6 percent in February, its highest level since 1985.
Traders were looking ahead also to the release of US jobs data Friday for a fresh snapshot of the world’s top economy.
A strong reading could spur the Federal Reserve to act more aggressively to fight inflation, with some commentators predicting several half-point US interest rate hikes this year.
Key figures around 1115 GMT
London - FTSE 100: FLAT at 7,536.73 points
Frankfurt - DAX: DOWN 1.5 percent at 14,606.12
Paris - CAC 40: DOWN 1.0 percent at 6,725.49
EURO STOXX 50: DOWN 1.0 percent at 3,960.42
Tokyo - Nikkei 225: DOWN 0.8 percent at 28,027.25 (close)
Hong Kong - Hang Seng Index: UP 1.4 percent at 22,232.03 (close)
Shanghai - Composite: UP 2.0 percent at 3,266.60 (close)
New York - DOW: UP 1.0 percent at 35,294.19 (close)
Brent North Sea crude: UP 1.6 percent at $111.97 per barrel
West Texas Intermediate: UP 1.9 percent at $106.17 per barrel
Euro/dollar: UP at $1.1131 from $1.1090 late Tuesday
Pound/dollar: UP at $1.3146 from $1.3094
Euro/pound: UP at 84.68 pence from 84.66 pence
Dollar/yen: DOWN at 121.91 yen from 122.77 yen
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