Markets

European Equities Close Lower as Slumping Oil Prices Drag Commodities Stocks Lower

European main equities ended significantly lower on Monday as a slight uptick in industrial production across the eurozone failed to offset a bearish sentiment in oil markets which pummeled commodities stocks.

Crude oil prices were recently trading at prices worth less than half of what they were at one year ago due to a vast glut in supply.

A decision made by the Organisation of Petroleum Exporting Countries, which holds a 40% share of the world's oil production market, to raise, rather than lower, its production ceiling for 2016, underpins the most recent decline which has seen oil sliding to prices not previously seen since February 2009.

In a speech given in Bologna, Italy, European Central Bank President Mario Draghi reassured the market that the central bank would intensify the use of all available instruments to spur inflation if such actions are deemed necessary.

In macro-economic news, industrial production rose marginally across the eurozone, according to Eurostat, the statistics office of the European Union. Seasonally adjusted industrial production rose by 0.6% in the euro area in October 2015 from September 2015. Compared to the corresponding month of the previous year, industrial production increased by 1.9%.

In company news, commodities stocks posted heavy losses on the FTSE 100, with Glencore leading the decline by slumping 6.3%. Anglo American, Antofagasta, and BHP Billiton fell 4.2%, 3.9% and 3.6%, respectively. Biopharmaceutical firm was the second biggest decliner, closing 4.9% lower.

Oil and gas production major Royal Dutch Shell's A and B Shares closed 2.4% and 2.2% lower respectively on the FTSE 100 after the company announced further details of a proposed restructuring under consideration in advance of completing its recommended combination with BG Group. Shell expects the restructuring will be required to achieve the expected benefits of the recommended combination, including previously disclosed and reported-on pre-tax synergies of $3.5 billion.

On the DAX, German electric utility firm RWE led decliners by falling 4.3%. Carmaker Volkswagen followed with a 4.1% drop, energy major E.On closed 4.0% lower. Real estate firm Vonovia dropped 2.7%.

And, on the CAC-40, steel producer ArcelorMittal slumped 6.3%, electricity distribution company Electricite de France closed 3.7% lower, while automakers Peugeot and Renault fell 3.0% and 2.7%, respectively. French oil major Total ended 2.9% lower.

The FTSE 100 fell 1.32%, the DAX lost 1.94% and the CAC-40 retreated by 1.68%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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