- EU predicts tepid growth, cuts inflation forecast
- ECB to withhold interest rate cut until April, Goldman expects
- German fourth quarter GDP confirmed at 0.4 per cent growth
- Ukraine delays unity government vote
- Slump in Chinese yuan hurts mining stocks
FTSE 100: -0.52%
CAC 40: -0.10%
FTSE MIB: -0.02%
IBEX 35: 0.47%
Stoxx 600: 0.06%
European stocks were mixed after the European Commission predicted tepid growth for the euro-area over the next two years and cut its inflation forecast.
The euro-area is expected to grow 1.2% this year and 1.8% next year after two consecutive years of contraction, according to the latest economic forecasts from European Union's (EU) executive body.
The Commission also cut its inflation projection to just 1% over the course of 2014, compared to a November estimate of 1.5%.
Revised figures on Monday showed consumer prices rose 0.8% in January, well below the European Central Bank's (ECB) 2% target.
The EU's new forecasts pile pressure on the ECB to enact greater measures to boost the recovery of the bloc amid high unemployment and falling inflation.
ECB President Mario Draghi has indicated that the central bank will consider changing its policy at its March meeting following the release of more comprehensive data, including its own economic forecasts.
Goldman Sachs today said it sees the ECB holding back on an interest rate cut until April but did not rule out a move to keep money market liquidity topped up by ending its weekly 'sterilisation' of past government bond purchases.
In other European news today, confirmed figures showed Germany's gross domestic product (GDP) increased by a modest 0.4% on the quarter between October and December compared with 0.3% during the previous three months.
The Federal Statistics Office said foreign trade drove growth in Europe's largest economy in the fourth quarter, while domestic demand dragged.
In France, business confidence remained stable in February, continuing to point to a recovery, the statistics bureau Insee said today.
The indicator of French business confidence came in at 100, the long-term average for the index and in line with expectations.
In the UK, retail sales grew at a considerably faster-than-expected pace in the 12 months to February and at their fastest rate since the middle of 2012, the Confederation of British Industry's (CBI) Distributive Trades Survey.
The total sales gauge rose to a reading of 37, from 14 in January (consensus: 15).
Ukraine's interim President Olexander announced today that the formation of a unity government was delayed until Thursday to allow further consultations to avoid the risk of separatism.
A unity government would allow the troubled nation to receive economic aid to prevent a default, but many in Ukraine's Russian-speaking regions oppose the installation of a more European-leaning interim administration.
It comes as the Ukrainian parliament voted to send the fugitive President Viktor Yanukovych to The Hague to be tried over the violence that led to at least 82 deaths in Kiev last week. He is on the run and believed to be in Crimea.
In China, stocks slid after a sharp fall in the yuan raised fears that of slower growth in the world's second largest economy. China's yuan dropped the most in more than three years on bets the central bank wants to end the currency's appreciation to boost trading.
US consumer confidence, house prices
The Conference Board's consumer confidence index for February slipped to a reading of 78.1 from 79.4 the month before. Economists had pencilled in a reading of 80.
Capital Economics said the drop was probably weather related or a delayed reaction to the recent dip in equity prices.
"Overall, we aren't too concerned about the tiny decline in confidence, as the improving fundamentals suggest that a rebound is just around the corner."
Another report showed house prices in the 20 main US cities increased at a slower pace in December. The S&P/Case-Schiller Index climbed 13.42 % from a year earlier, down from a 13.71% rise in November. Nevertheless, it beat the consensus estimate for a 13.40% increase.
Vivendi, Jyske Bank
Vivendi declined after the French media and telecoms business reported 2013 results that fell short of analysts' expectations.
Jyske Bank advanced after the Dutch lender agreed to buy BRFkredit for about 7.4bn kroner.
Ashmore Group fell after the UK emerging markets money manager reported $2.9bn of net outflows in its fiscal first half as investors sought to avoid assets in developing economies.
A gauge of miners, including Fresnillo, Rio Tinto and Anglo American, were down as the price of metals fell on the drop in the Chinese yuan.
Aixtron edged lower as the German maker of equipment for semiconductors reported fourth-quarter sales below forecasts.
St. James's Place was higher after the British wealth manager increased its full-year dividend by 50%.
Fresenius Medical Care slid as the world's biggest provider of kidney dialysis posted full-year earnings that missed market forecasts.
Straumann Holding gained after the world's biggest maker of dental implants reported a increase in 2013 earnings and said it expects revenue will rise in a low-single-digit range in 2014.
The euro rose 0.09% to $1.3748.
Brent crude futures dropped $0.857 to $109.700 per barrel, according to data from the ICE.