- Emerging market currencies weaken
- US new home sales fall
- German IFO business climate index rises
- Draghi signals move towards QE
FTSE 100: -1.70%
CAC 40: -0.41%
FTSE MIB: -0.44%
IBEX 35: -0.95%
Stoxx 600: -0.83%
European stocks declined as currencies in emerging markets weakened and the Turkish central bank said it would hold an emergency meeting to address the lira's decline.
A sharp fall in the lira prompted the Turkish central bank to schedule an extraordinary policy meeting for Tuesday to analyse the necessary measures to ensure price stability.
The FTSE Emerging Markets index was down 1.4% in afternoon London trading today.
Global funds pulled $2.4bn from emerging-market equity funds in the week through January 22nd, according to Citigroup.
It comes as some analysts fear another round of monetary stimulus tapering by the US Federal Reserve could hamper the global economic recovery.
The Fed will announce its latest policy on Wednesday after last month deciding to start scaling back monthly asset purchases by $10bn to $75bn. According to consensus forecasts the bank will announce another $10bn cut.
Nonetheless, strategists at UBS were unfazed by the recent spate of volatility, telling clients that the current situation in emerging markets is not a 1990's style balance of payments crisis and that there are no risks of contagion.
Capital Economics added: "Although some currencies have fallen sharply this month, it still does not seem right to talk about a new financial crisis sweeping across all emerging markets (EMs)."
US home sales, German Ifo
US new home sales fell more than expected by 7% to a 414,000 annualised pace in December, after a revised 445,000 rate in November. Economists had pencilled in a small increase to an annualised rate of 455,000.
In Germany, the IFO business sentiment index - which measures firms' sentiment about the current business situation and their expectations for the next six months - rose to 110.6 from 109.5, coming in above the forecast for an increase to 110.0.
Meanwhile, European Central Bank (ECB) President Mario Draghi has signalled a possible move towards monetary stimulus to ward off deflation.
At the World Economic Forum in Davos, Switzerland, Draghi said the ECB would be prepared to buy packages of bank loans to households and companies, in stark contrast to traditional quantitative easing.
Elsewhere in Europe, Eurogroup finance ministers were meeting in Brussels in the afternoon to address the banking union.
Eurogroup Chairman Jeroen Dijsselbloem on Saturday said he hopes this year's asset quality review and stress tests of European banks will reveal some bad news to give the process credibility.
Ziggo, BG Group
Ziggo was lower after Liberty Global agreed to take over the Dutch broadband provider for €4.9bn.
Oil and gas producer BG Group tumbled after saying 2013 earnings would be lower than forecast due to reduced liquefied natural gas shipments from Egypt and US forward-gas prices.
Vodafone declined after AT&T said it doesn't intend to make an offer for the mobile-phone operator.
RSA Insurance Group dropped after The Sunday Times reported it is considering scrapping its final dividend to raise £500m to fill a balance-sheet loss.
Ericsson gained as the network-equipment maker and Samsung Electronics settled their patent dispute and struck a new licensing deal for wireless technology in smartphones, televisions, tablets and Blu-Ray disk players.
Lanxess rallied after the chemical maker announced the appointment of Matthias Zachert as its new Chief Executive Officer.
The euro fell 0.05% to $1.3671.
Brent crude futures fell $0.766 to $107.060 per barrel, according to ICE data.