EUROPE MARKETS: European Stocks Fall On Stumble In Oil Prices, Central Bank Concerns

By Carla Mozee and Sara Sjolin, MarketWatch Features Dow Jones Newswires

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European stocks ended in slightly negative territory on Friday, pushed lower by a slide in oil prices and nagging worries about the potential end of ultraloose monetary policy.

The Stoxx Europe 600 fell 0.1% to 380.18, trimming its weekly gain to 0.2%.

The region's stocks pared its losses after the release of the closely watched monthly jobs figures from the U.S., which can help the Federal Reserve decide how to proceed with monetary policy. Nonfarm payrolls increased by more-than-expected 222,000 in June (http://www.marketwatch.com/story/us-adds-222000-jobs-in-june-as-hiring-surges-2017-07-07), beating the 180,000 forecast by analysts polled by MarketWatch. The unemployment rate, however, ticked up to 4.4% from 4.3% and wage growth was weak.

"While there were divergent surprises in different aspects of the report, we don't see it calling into question expectations for Fed balance sheet reduction being announced in September and rates being hiked in December in line with the June FOMC meeting guidance," Ted Wieseman, economist at Morgan Stanley, said in a note.

Friday's decline fro the Stoxx 600 marked a second straight loss. Thursday's session ended lower by 0.7% (http://www.marketwatch.com/story/european-stocks-slip-after-fed-minutes-cause-bemusement-2017-07-06) as minutes from the European Central Bank's (http://www.marketwatch.com/story/ecb-considered-abandoning-vow-to-accelerate-qe-2017-07-06) and Federal Reserve's respective meetings in June fueled fears among traders that the easy-money era in monetary policy is starting to come to an end.

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Reflecting such concerns, German bund yields on Thursday jumped to an 18-month high as part of a global rout in bond prices. Massive bond buying and other stimulus efforts by major central banks after the financial crisis have helped bolster equity markets worldwide for years.

German 10-year yields were steady around 0.573% on Friday. Just last week, the yield was around 0.23%.

"European investors remain nervous about the shifting ECB policy stance, even with a rate hike still looking a very distant prospect given subdued core inflation," said Ian Williams, economist and strategist at Peel Hunt, in a Friday note.

Equities have fallen "despite the continuing positive message from the region's economic activity indicators; a clear signal as to just how important monetary policy support remains to the performance of risk assets," said Williams.

Read:German bonds may offer the clearest warning that the stock market's bull run is sputtering (http://www.marketwatch.com/story/german-bonds-may-offer-the-clearest-warning-that-the-stock-markets-bull-run-is-sputtering-says-mcclellan-2017-06-30)

The talk about the end of cheap money pushed the euro above $1.14 this week. On Friday, the shared currency hit an intraday high of $1.1441 after the U.S. jobs report. It eventually fell to $1.1393, with the jobs data seen as strong enough to support the case for another Fed interest-rate hike, which benefits the dollar. The euro fetched $1.1424 late Thursday in New York.

Oil: The Stoxx Europe 600 Oil & Gas Index tanked 1.2% as oil prices tumbled more than 3% on Friday (http://www.marketwatch.com/story/oil-prices-drop-1-volatile-session-2017-07-07). That move followed a spike higher in prices late Thursday after a much larger-than-expected weekly fall in U.S. crude supplies, by 6.3 million barrels.

But investors are still grappling with concerns that global supplies aren't falling quickly enough, despite production cuts led by the Organization of the Petroleum Exporting Countries.

Read: OPEC can't save oil market alone--the U.S. has to step in, says Morgan Stanley (http://www.marketwatch.com/story/opec-cant-save-oil-market-alonethe-us-has-to-step-in-says-morgan-stanley-2017-07-06)

In the oil group, producer Tullow Oil PLC (TLW.LN) gave up 2.9%, Spain's Repsol SA (REPYY) moved down 1.1% and oil services company Petrofac Ltd. (PFC.LN) was pushed 3.4% lower.

Stock movers: Carrefour SA (CA.FR) fell 4.6%, leading losses on the Stoxx 600, hurt by worries about profit margins at the French retailer.

EasyJet PLC (EZJ.LN) topped the Stoxx 600, rising 5.4% after Credit Suisse raised its rating on the budget airline to outperform from neutral.

Mediaset SpA (MS.MI) fell 3.1%, with the Italian broadcaster's rating cut to underperform at Exane BNP Paribas, according to Dow Jones Newswires.

Indexes: Germany's DAX 30 rose 0.1% to 12,388.68, France's CAC 40 shed 0.1% to 5,145.16, and the U.K's FTSE 100 turned up 0.2% to 7,350.92 (http://www.marketwatch.com/story/uk-stocks-fall-for-2nd-day-as-central-bank-fears-persist-2017-07-07) as the pound fell.

(END) Dow Jones Newswires

July 07, 2017 12:13 ET (16:13 GMT)