European stocks hit as EU shreds growth forecasts

European equities mostly fell Tuesday after the EU slashed its economic forecasts for the eurozone, while the energy sector sank on plunging oil prices.
In afternoon deals, London's FTSE 100 index shed 0.14 percent to stand at 6,479.16 points, the Paris CAC 40 dropped 0.49 percent to 4,173.60 points and Milan's FTSE Mib sank 1.13 percent to 19,149.44.
And Frankfurt's DAX 30 slipped 0.15 percent to 9,237.94 points compared with Monday's close.
The euro rose to $1.2518 from $1.2484 late in New York on Monday.
Wall Street opened slightly lower on the EU's slower growth forecasts and a higher US trade deficit. Investors were also hesitant as US mid-term elections were being held on Tuesday.
Five minutes into trade, the Dow Jones Industrial Average stood at 17,356.99, down 0.05 percent, and the broad-based S&P 500 dipped 0.18 percent to 2,014.23, while the tech-rich Nasdaq Composite Index shed 0.27 percent to 4,626.19.
The EU sharply cut its growth forecasts for the eurozone on Tuesday, warning that France and Italy remain huge problems for the sluggish European economy while calling for investment.
It slashed its 2014 growth forecast for the 18-country eurozone to just 0.8 percent from the previous 1.2 percent, with 2015 chopped to 1.1 percent from 1.7 percent. Growth is seen as picking up to 1.7 percent in 2016.
- 'Bleak assessment' -
"The European Commission have delivered a bleak assessment of the economic outlook for the eurozone," said VTB economist Neil MacKinnon.
"Stagnation and deflation remain the key challenges for policymakers."
While the figures show the eurozone economy avoiding a triple-dip recession for now, they will renew global concerns about its sluggish recovery from the euro debt crisis that nearly sank the single currency three years ago.
"The widely expected move (to downgrade growth) has highlighted the economic challenges facing the region with growth and inflation likely to be subdued for the foreseeable future," added PVM analysts.
The threat of deflation and recession combined with stubbornly high unemployment loomed large in the Commission's autumn economic forecasts.
Equities in Europe had also fallen on Monday, shedding some of last week's bumper gains as investors took profits and digested weaker-than-expected data.
"European stocks are adding to yesterday’s losses as traders... absorb the latest downgrade to the eurozone's growth prospects for next year," said analysts at PVM brokerage in a research note on Tuesday.
France's economy is meanwhile predicted to grow by a lacklustre 0.3 percent this year, against an earlier forecast of 1.0 percent, and expand by 0.7 percent in 2015.
But in a dire forecast, Brussels said the public deficit in France would surge to 4.5 percent of total GDP in 2015 and keep widening to 4.7 percent in 2016, making it the biggest in the eurozone.
These figures are way off the EU's limit on public deficits of 3.0 percent of output.
Debt-laden Italy was expected to stay in recession for a third consecutive year with a contraction of 0.4 percent, followed by 0.6 percent growth next year.
- Oil price slump -
Aside from the gloomy growth downgrades, European markets also took a heavy knock from tumbling global oil prices, which dent the oil sector's profitability.
The oil market plunged on Tuesday, with Brent hitting a four-year low after Saudi Arabia slashed its export prices for the US market to counter demand for shale fuels.
Brent North Sea crude for delivery in December hit a low of $82.02 before recovering slightly to stand at $82.40 per barrel, while US benchmark West Texas Intermediate hit a three-year trough at $75.84 and later stood at $77.38.
In reaction, shares in French oil and gas giant Total sank 2.75 percent to 45.460 euros in Paris in afternoon trading.
In London, Anglo-Dutch energy major Royal Dutch Shell saw its 'A' share slide 2.07 percent to 2,150.50 pence, while British rival BP dropped 2.36 percent to 433.25 pence.
In foreign exchange deals, the euro rose to 78.21 British pence from 78.15 pence. The British pound firmed to $1.6004 from $1.5974 on Monday.
On the London Bullion Market, gold prices rose to $1,169.25 an ounce, from $1,167.75 an ounce on Monday.