Euro Zone Lending Accelerates, Market Indexes Close Mixed

Lucy Stoeva
29 Mar, 2016
New York City

European market indexes closed mixed as bank lending in February rose at the fastest pace since 2011. Oil and base metal prices retreated as the U.S. dollar inched higher.

[R]4:00 PM Frankfurt, Germany – European market indexes closed mixed as bank lending in February rose at the fastest pace since 2011. Oil and base metal prices retreated as the U.S. dollar inched higher.[/R]

European bourses traded mixed on Tuesday after 4-day Easter weekend as commodities retreated and bank lending to corporation and households increased for the second month in a row in February and at the fast pace since 2011.

Broad market gains pushed higher the indexes in France and Germany, while the U.K. market underperformed on the weak resource sector.

Energy and mining stocks were among the worst performing sectors after oil and base metal prices declined. Following a strong performance in the early weeks of the first-quarter, stocks in the sector fell on lower commodities prices expectations.

Oil price declined for the fifth consecutive session on ongoing concerns about global oversupply.

Brent crude oil futures tumbled 3.7% to $38.80 per barrel and WTI crude oil futures dropped 3.55% to $37.99 a barrel.

In Oslo, Seadrill plummeted 10.1%, while in London, Tullow Oil shed 3.1%, BP fell 2%, and Royal Dutch Shell erased 1.7%.

The rise of the U.S. dollar put additional pressure on the resource market, because the dollar-denominated commodities become more expensive for holders of other currencies.

Among miners with significant weights in the FTSE 100 index, Anglo American, Antofagasta, BHP Billiton, and Glencore recorded losses of 3.3% to 4.9%.

In Lisbon, Banco BPI and Millennium BCP dropped more than 6% due to the failure of the Spanish Caixabank and Angolan investor Isabel dos Santos to reach an agreement on their BPI holdings.

On the positive side, February lending to euro zone companies and households rose for a second consecutive month and at the fastest rate since 2011, according to data from the European Central Bank.

Bank lending to non-financial businesses rose 0.9% in February, compared with growth of 0.6% in January. The data indicates the eight consecutive month of growth, which follows about 40 months of contraction.

Loans to households rose 1.6% in February, compared with growth of 1.4% in January.

Investors in Europe anticipate a speech by Federal Reserve Chair Janet Yellen after the close of the trading day as the markets are looking for clues on the future direction of Fed’s interest rate policy.

Among financial stocks, RSA Insurance Group jumped 1.6%, Aberdeen Asset Management rose 0.9%, and insurer and asset management firm Aegon gained 0.4%.

In London, the FTSE 100 lost 0.58 to 6,105.90, while in Frankfurt, the DAX index rose 36.59, or 0.37%, to 9,887.94.

In Paris, the CAC 40 index gained 36.99, or 0.85%, to 4,366.67.

AstraZeneca Plc inched up 0.2% to 3,914 pence after the announcement that the company’s Tagrisso drug has been approved in Japan for lung cancer treatment.