European equities extended losses on Tuesday, as the sell-off in U.S. stocks gained momentum, with investors spooked by the weakness in the price of oil, currency turmoil and ongoing negotiations surrounding Greece.
The pan-European Euro Stoxx 600 Index (^STOXX) extended losses as the session progressed. The big corporate news of the day was that Credit Suisse (Swiss Exchange: CSGN-CH) Chief Executive Brady Dougan is stepping down, to be replaced by the head of Prudential (London Stock Exchange: PRU-GB), Tidjane Thiam.
Prudential shares slipped as much as 3.5 percent on the news, while Credit Suisse shares surged over 8 percent on anticipation of the new leadership team.
Elsewhere, the price of oil pushed lower on Tuesday and the energy sector was the worst performer across different sectors. Mining stocks also fell sharply.
Brent struggled to hold above $ 57 a barrel and crude just above $ 49 a barrel. Oil exploration firm Tullow Oil (London Stock Exchange: TLW-GB) was down over 6 percent on Tuesday morning.The decline comes after Goldman Sachs said in a note Monday that it expected U.S. crude to drop as far as $ 40 a barrel in the near-term.
European sovereign bond yields also crunched lower during the session, further highlighting a flight to safety and the selling of riskier assets like stocks. The German DAX (^GDAXI) was down by over 1 percent by midday GMT, before reversing some losses.
U.S. stocks traded more than 1 percent lower on Tuesday, pressured by a surge in the dollar and some weakness in oil.
The U.S. dollar advanced nearly 1 percent to 12-year highs as the euro fell below $ 1.08 for the first time in 8 years on the beginning of QE in the euro zone.
Elsewhere, Greece and experts from the troika of organizations that oversee the country’s bailout – the European Commission, European Central Bank and the International Monetary Fund – will start detailed discussions on Greek reforms tied to its emergency financing on Wednesday, the head of the Eurogroup said.
“We’ve talked about this long enough now,” Eurogroup president Jeroen Dijsselbloem said in Brussels on Monday following a meeting of finance ministers at which Greece’s reform proposals and funding needs were discussed once again.
Referring to the four-month extension to Greece’s bailout program, during which time it must reform in order to receive more aid, Dijsselbloem said: “We only have four months…Let’s get it done.” He also proposed the possibility of Greece receiving smaller chunks of funding as it makes reforms.
Greek stocks on the Athens index were one of the standout gainers on Tuesday with the bourse up 1 percent by early afternoon trading.
In other news, Italy is in technical discussions with the European Commission over its plans to form a vehicle to help its banks offload soured loans, Economy Minister Pier Carlo Padoan said late Monday, Reuters reported.
In data releases Tuesday, France’s industrial output numbers rose again in January, with an increase of 0.4 percent. Italy’s figures posted a sharp fall which dampened recovery hopes for the country.
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