- Fed stimulus cut concerns grow
- UK construction picks up
- Spain's unemployment falls
- Italy needs to rein in debt, says EU's Rehn
FTSE 100: -0.95%
CAC 40: -2.65%
FTSE MIB: -1.95%
IBEX 35: -1.44%
Stoxx 600: -1.53%
European stocks ended Tuesday in the red as markets speculated on the timing of the stimulus tapering by the Federal Reserve.
Better-than-expected economic data releases recently has fuelled speculation that the central bank will begin scaling back its monthly $85bn bond buying programme at its mid-December meeting.
"Until recently, this had looked unlikely due to the unknown impacts of the US government shutdown on the economy and the mixed data seen in the months leading up to it, but now it looks well and truly back on the table," said Alpari analyst Craig Erlam.
"The data we've seen for September recently has been surprisingly strong. If we see similar figures from the rest of the November figures, the FOMC may be tempted to test the water with a small reduction of around $10bn."
A batch of US data out tomorrow and a non-farm payrolls report on Friday will be closely watched to gauge the health of the world's biggest economy that could prompt an earlier tapering than initially anticipated.
UK construction rises more than expected
The UK Markit/CIPS construction sector purchasing managers' index jumped to 62.6 from 59.4 in October, ahead of the consensus estimate for a reading of 59. A reading above 50 signals expansion.
In Spain, the number of people registered as unemployed fell by 2,475 last month, the first decline for the month of November since the current system was introduced in 1997.
Unemployment normally picks up in November as the tourism sector slows down after the summer. The consensus estimate was for an increase of 50,000 people.
EU's Rehn warns Italy on debt reduction
European Commission Vice-President and Commissioner for Monetary and Economic Affairs and the Euro
Olli Rehn warned Italy today that the country was not doing enough to reduce debt.
At approximately 134% of gross domestic product (GDP), Italy's public debt is far above the 60% European Union (EU) ceiling and second only to Greece.
"Italy needs to follow a certain rate of debt reduction and it is not following it," he said in the interview. "The structural adjustment was supposed to be 0.5% of GDP and it is only 0.1%. That is why Italy has no room to maneuver," Rehn told Italian paper La Reppublica.
Elsewhere in Europe former European Central Bank (ECB) member José Viñals said that sluggish growth and low inflation in the Eurozone gives the monetary authority elbow room to take further monetary policy action.
"In my opinion, the ECB could change rates even further in order to accelerate the European economic recovery," the former Eurozone monetary policymaker said in an interview published on Monday in the Polish newspaper Rzeczpospolita.
Viñals, who is current Financial Counsellor and Director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF), noted that the economic situation gave the central bank leeway to pursue more stimulus.
"Inflation is low, significantly below 2%, and the economy needs cheap money in order to recover. The recovery is very slow and unemployment remains at a dangerously high level," he explained.
After cutting rates to a record low of 0.25% last month, the ECB's next monetary policy decision will be announced on Thursday. The consensus does not expect there to be another rate change after November's surprise cut.
Orange dropped amid concern a price war in the French mobile market will extend to fourth-generation data services.
Miners including Antofagasta, Fresnillo and Randgold edged lower with commodity prices fluctuating following a sell-off yesterday.
ThyssenKrupp declined after raising €882.3m through a share sale.
Sonova tumbled after Morgan Stanley downgraded the stock to 'equal weight' from 'overweight'.
France's CAC 40 edged lower after Credit Suisse Group AG cut its rating on French stocks to 'underweight' from 'benchmark'.
Euro strengthens against dollar
The euro rose 0.43% to $1.3600.
Brent crude futures increased $0.0571 to $112.090 per barrel, ICE data showed.