European stocks fall further on oil price drop

Most of Europe's major stock market indices swept lower on Thursday by a pronounced slide in oil prices this week.

Oil has been in the doldrums on stubborn concerns over a vast supply glut, casting a dark shadow over the energy sector.

"The rout in oil prices continues, and the worries this creates are spilling over into equity markets as well, which are looking decidedly unhealthy once again," said Chris Beauchamp, chief market analyst at trading firm IG.

Both the London and Paris stock markets wer down 0.3 percent in afternoon trading, while Frankfurt bucked the trend, edging up 0.08 percent compared with the close Wednesday.

While oil prices rose Thursday on news of falling US inventories, this followed heavy declines caused by the market remaining awash with crude and remain down nearly a fifth from peaks two months ago despite OPEC and Russia agreeing to extend production cuts.

"European equities have fallen again as the weakness in oil is weighing on investor confidence," noted CMC Markets analyst David Madden.

"Oil has fallen back ... and traders are worried it could bring about low inflation and diminished growth."

Low inflation can ultimately lead to deflation, or a prolonged period of falling prices, causing consumers to hold off purchases in the hope that the cost of goods will drop even further.

- A barrel of bears -

New York crude had dived Wednesday to ten-month lows, hitting $42.05 a barrel.

London Brent oil meanwhile hit $44.35, a trough last seen in November.

"Overall, the market remains fixated on what happens with oil," added Beauchamp.

Wall Street stocks opened higher, with the Dow up 0.03 percent.

"US equities are managing minor gains in early-morning action as crude oil prices appear to be stabilizing, but are still in recently-reached bear market territory," said analysts at brokerage Charles Schwab.

In Asia on Thursday, shares in Japanese airbag maker Takata suffered another crushing collapse, plummeting more than 50 percent on fears the company at the centre of the auto industry's biggest-ever safety recall is headed for bankruptcy.

The Tokyo-based car parts giant, facing lawsuits and huge recall-related costs over a bag defect linked to at least 16 deaths globally, has suffered a share-price plunge for four straight days.

It is now worth less than a quarter of its value from just a week ago when a report by Japan's leading Nikkei business daily said it would seek bankruptcy protection and sell its assets to a US company.

- Key figures around 1330 GMT -

London - FTSE 100: DOWN 0.3 percent at 7,427.68 points

Paris - CAC 40: DOWN 0.3 percent at 5,258.98

Frankfurt - DAX 30: UP 0.1 percent at 12,784.45

EURO STOXX 50: DOWN 0.2 percent at 3,547.23

New York - Dow: UP 0.03 percent at 21,415.45

Tokyo - Nikkei 225: DOWN 0.1 percent at 20,110.51 (close)

Hong Kong - Hang Seng: DOWN 0.1 percent at 25,674.53 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,147.45 (close)

Euro/dollar: DOWN at $1.1157 from $1.1168 at 2100 GMT on Wednesday

Pound/dollar: DOWN at $1.2661 from $1.2671

Dollar/yen: DOWN at 111.22 yen from 111.37 yen

Oil - Brent North Sea: UP 42 cents at $45.24 per barrel

Oil - West Texas Intermediate: UP 26 cents at $42.79

burs-rl/jh

Source: AFP