By Carla Mozee, MarketWatch
LONDON (MarketWatch)—European stocks relinquished gains Wednesday, with the turnaround led by a slump in energy shares as oil prices extended their losses.
U.S. oil futures /zigman2/quotes/209723563/delayed CLF25 -54.97% fell by 5% after the U.S. Energy Information Administration reported an unexpected increase in supplies, by 1.5 million barrels in the week ending Dec. 5. Oil prices had already been losing ground ahead of the U.S. data, as the Organization of the Petroleum Exporting Countries cut its forecast for oil demand next year. January Brent crude fell nearly 5% to trade below $64 a barrel on London’s ICE Futures.
Oil shares: Oil and gas stocks were the biggest losers on the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -3.26% , which ended 0.3% lower at 339.32. The adds to the pan-European index’s tumble of 2.3% on Tuesday, the worst drop since mid-October.
The Stoxx Europe 600 oil and gas group /zigman2/quotes/210599627/delayed XX:SXEP -4.62% fell 1.9%, reflecting share-price losses for the bulk of its 33 constituents. Dutch oil services firm Fugro NV /zigman2/quotes/202450147/delayed NL:FUR -8.49% tumbled 11%, Ophir Energy PLC gave up 5.3%, French oil services company Technip SA lost 3.4%
Among major oil companies, Total SA /zigman2/quotes/206172043/delayed FR:FP -2.27% fell 1.6% and BP PLC was off 1.5%. BP said Wednesday is expects to book $1 billion in restructuring charges over the next year as a streamlines operations and corporate activities.
Deutsche Bank on Wednesday slashed its 2015 forecasts for oil prices, including an 18% cut in its Brent crude projection, to $72.50 a barrel.
But the fall in oil prices since this summer could boost growth next year by about 0.5% in the euro area, “an economy that imports, rather than produces, energy,” said Credit Suisse’s European economics team in a note earlier Wednesday. Lower oil prices should free more than a half percentage point of discretionary spending for consumers, it said. Also, Credit Suisse estimates energy’s share of production costs in manufacturing is around 5%, “so the fall could deliver wider corporate margins and, subsequently, support spending on investment and employment.“
On the country indexes, the U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -5.25% finished 0.5% lower at 6,500.04, and Germany’s DAX 30 /zigman2/quotes/210597999/delayed DX:DAX -3.68% eked out a 0.1% gain at 9,799.73.
France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -4.23% fell 0.8% to 4,232.09. Earlier Wednesday, a government report showed French industrial production fell 0.8% in October compared with September. Economists surveyed by The Wall Street Journal expected a rise of 0.2%.
Among movers, Ashtead Group PLC /zigman2/quotes/200232063/delayed UK:AHT -9.32% shares topped the Stoxx 600, climbing 9.2% as the equipment-rental company said it expects full-year results to surpass its previous expectations. Pretax profit in its fiscal second-quarter rose 33%.
Stagecoach Group PLC /zigman2/quotes/206082799/delayed UK:SGC -3.93% shares fell 6.8% after the public transportation company posted a decline in first half pretax profit. The company did maintain its full-year expectations and declared a 10% higher interim dividend payment.
Greece: Greek stocks extended losses Wednesday, as political worries continued to fuel a selloff.
The Athex Composite /zigman2/quotes/210597948/delayed GR:GD -3.92% fell 1% to 893.71, though it ended off session lows. The index on Tuesday slid 13%, its worst one-day decline on record.
That sharp selling came after Greece’s government suddenly said it would hold a presidential election two months earlier than expected, on Dec. 17. That in turn came a day after eurozone finance ministers extended bailout talks for Greece into early 2015. The target for Greece to exit its 240-billion-euro ($297.07 billion) bailout program was the end of this year, but progress has been held up by a deadlock between the government and its international creditors over the Greek budget.
Attica Bank /zigman2/quotes/201836220/delayed GR:TATT -7.14% shares fell 13%, leading losses on the Athex index as they did on Tuesday. National Bank of Greece /zigman2/quotes/203923076/delayed GR:ETE -0.95% pulled back 1.8%, and Thessaloniki Port Authority /zigman2/quotes/204714337/delayed GR:OLTH -3.77% closed lower by 5.4%. But shares of real-estate developer REDS /zigman2/quotes/208780176/delayed GR:KAMP -5.22% climbed out of the red to rise 1.2%.
Opinion polls are pointing to a win by the far-left opposition Syriza party in national elections, and “the market doesn’t want a party that could disrupt the bailout agreement,” said Stan Shamu, market strategist, at IG Markets.
“Perhaps the selling [on Tuesday] on the back of Greek concerns was a tad overdone but, given Europe is already facing significant challenges, a political crisis in Greece is the last thing the eurozone needs,” he wrote.
In the bond market, the yield for 3-year Greek bonds jumped as high as 9.569%, according to Tradeweb, surpassing an 8.423% yield for 10-year bonds , with that move—a yield curve inversion—highlighting worries among investors that Greece may have trouble servicing short-term debt.