- Federal Reserve keeps QE unchanged
- EU, US and German data released
- ECB liquidity swap agreements
FTSE 100: -0.36%
CAC 40: -0.19%
FTSE MIB: 0.12%
IBEX 35: 0.02%
Stoxx 600: -0.09%
European stocks fell before the release of a slate of economic data and after the Federal Reserve hinted that a tapering of monetary stimulus could begin this year.
The US central bank yesterday decided to keep its monthly $85bn bond buying programme unchanged, pointing to weaker economic growth that was hampered by the 16-day partial government shutdown earlier this month.
While many economists expect a reduction to quantitative easing will be held off until March 2014, some interpreted the Fed's statement to a suggestion that it could come in December.
"Investors were spooked by what they believed to be a hint from the Fed in this month's statement, that asset purchases could be reduced at the December meeting," said Craig Erlam, Market Analyst at Alpari.
"If I'm honest, I just think that yet again the markets have overreacted [...] I still believe it will be March before tapering begins and I don't think the [Fed's] statement suggests otherwise."
The Fed also reiterated that it would keep interest rates near zero as long as the jobless rate remained above 6.5% and inflation did not threaten to rise above 2.5%.
Barrage of economic data released
Today's economic calendar is jam packed with the release of Eurozone inflation, US initial jobless claims, German consumer confidence and retail sales figures.
The consumer price index in the Eurozone is expected to remain unchanged at 1.1% in October.
In the US, initial jobless claims for the week ending October 25th will be unveiled along with the Chicago Purchasing Managers' regional manufacturing index which is pegged to fall to 55 in October from 55.7 in September. A reading above 50 signals expansion.
Market research institute GfK's consumer confidence index for Germany fell unexpectedly to 7.0 in November from 7.1 in October. Economists had predicted a reading of 7.2.
Also out in Europe's biggest economy is a report on retail sales which are expected to rise by 1.1% in September, compared to a 0.3% increase a month earlier, according to consensus.
ECB makes liquidity swap agreements with central banks permanent
The European Central Bank (ECB) has said it is making its liquidity swap arrangements with global central banks permanent, according to an emailed statement obtained by Bloomberg.
ECB will convert temporary, bilateral arrangements with the Bank of Canada, the Bank of England, the Federal Reserve, the Bank of Japan and the Swiss National Bank into standing facilities, allowing banks to access global currencies, including the euro when needed.
"The existing temporary swap arrangements have helped to ease strains in financial markets and mitigate their effects on economic conditions," the ECB said. "The standing arrangements will continue to serve as a prudent liquidity backstop."
The arrangements started in 2008 to help keep funds flowing as markets froze.
BNP Paribas advanced after the French bank reported a rise in third quarter net income that beat analysts' expectations.
Royal Dutch Shell dropped after posting a fall in profit that missed forecasts.
Danske Bank fell after Denmark's biggest lender reduced its 2013 forecasts and lowered its target for how much it will return to investors.
L'Oreal slumped as the beauty products maker reported sales that fell short of market estimates due to weak performance in North America.
Other asset classes decline
The euro was down 0.20% to $1.3709.
Brent crude futures fell $0.384 to $109.440 per barrel on the ICE.