By Tommy Stubbington
European stocks slipped Thursday, weighed down by a selloff in
oil and gas shares, while Greek bonds continued to suffer in the
aftermath of the weekend's election.
The Stoxx Europe 600 was 0.7% lower midmorning. Shares in oil
giant Royal Dutch Shell fell more than 4% after its fourth-quarter
profit fell short of market expectations.
That dragged down the broader energy sector, with oil and gas
companies on the Stoxx 600 falling 2.8%. The moves echoed a selloff
in U.S. energy stocks after Wednesday's decline in U.S. oil
prices.
Oil's latest decline had overshadowed the U.S. Federal Reserve,
which reiterated its statement that it would remain patient in
raising rates.
The Fed statement had little impact on the dollar. The euro and
the British pound were steady against the buck Thursday.
Despite Thursday's declines, European shares have outperformed
their U.S. peers since the European Central Bank last week
announced it will embark on a bond-buying stimulus program.
A preference for European equities over U.S. markets is becoming
more popular "but we don't think it's becoming consensus
positioning wise yet, " said Deutsche Bank strategist Jim Reid.
Gains have come despite a sharp selloff in Greek assets as
markets take fright at the new Syriza-led government. Athens's main
stock index was 2.1% higher in early trade, after Wednesday's 9.2%
decline.
But Greek bonds continued to weaken after their massive losses
in the previous session, with the yield on the bond maturing in
July 2017 nearly two percentage points higher Thursday at more than
18%. Yields rise when prices fall.
The ECB action has buoyed bonds across the eurozone and helped
insulate the rest of the currency area from the turmoil in Greece.
Italian and Spanish bonds have weakened only modestly.
German bonds, considered the eurozone's safest, remained in high
demand Thursday, with the 30-year bond yield falling below 1% for
the first time. Yields fall as prices rise.
In commodities markets, Brent crude oil was steady at $48.49 a
barrel, and gold was 0.5% lower at $1,280.00 and ounce.
Write to Tommy Stubbington at tommy.stubbington@wsj.com