European Markets Dropped After Bank Recovery Proved Short-lived

(RTTNews) - The European markets sank back near 2 1/2 year lows Thursday, after they snapped a 7-session losing streak yesterday. The weak performance of the Asian markets and the continued weakness in crude oil prices had investors in a negative mood. Concerns about slowing global growth also played a rose, as Federal Reserve Chair Janet Yellen warned of several risks facing the world's largest economy in her testimony before Congress.

Bank stocks were among the weakest performing stocks Thursday, despite their brief recovery yesterday. A profit warning from Societe Generale did not help matters. Disappointing results from Rio Tinto also weighed on mining stocks. However, gold companies were among the best performing stocks, as investors flee to safe havens.

Sweden's central bank cuts its key interest rates deeper into negative zone on Thursday in another attempt to bring krona down and push inflation to the 2 percent target.

The bank also signaled that it was willing to take rates lower from the current negative levels, among other steps such as an extension of government bond purchases and foreign exchange market interventions if the krona appreciates quickly.

The Executive Board of the Riksbank unexpectedly decided to cut the repo rate by 0.15 percentage points to -0.50 percent, on Thursday. The bank was expected to keep its rate unchanged at -0.35 percent.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 3.90 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 3.51 percent.

The DAX of Germany dropped 2.93 percent and the CAC 40 of France fell 4.05 percent. The FTSE of the U.K. declined 2.39 percent and the SMI of Switzerland finished lower by 3.04 percent.

In Frankfurt, Deutsche Bank plunged 5.83 percent after rallying sharply the previous day on reports it is considering buying back several billion euros of its debt to help ease investor concerns about its funds. Commerzbank also sank 6.57 percent.

BASF declined 2 percent. Paints and coatings maker Akzo Nobel has confirmed that it is in talks with the German chemical giant regarding a potential purchase of the latter's industrial coatings business

Metro AG weakened by 6.62 percent. The department store operator reiterated the group's forecast after reporting earnings for the holiday season quarter that missed analysts' estimates.

RWE decreased 4.26 percent and peer E.ON surrendered 4.57 percent.

In Paris, Societe Generale plunged 12.57 percent after a profit warning. After reporting higher net profit in its fourth quarter, the lender warned that it would fall short of its profitability target this year.

Credit Agricole weakened by 6.60 percent and BNP Paribas finished lower by 6.02 percent.

Total SA lost 3.27 percent. The energy giant reported a 20 percent increase in annual net profit and unveiled further cost reductions and asset sales in 2016 to enable it to weather a slump in crude prices. Technip also closed down by 3.44 percent.

In London, Rio Tinto fell 3.40 percent after the mining giant swung to an annual loss and scrapped its progressive dividend policy, citing challenging market conditions.

Glencore declined 6.22 percent. The company said its own sourced copper production for the full year was down 3 percent to 1.50 million tonnes, reflecting the suspension of processing operations at Katanga and a significant curtailment at Mopani.

Randgold Resources jumped 7.54 percent and Fresnillo gained 5.42 percent.

Thomas Cook Group dropped 1.88 percent. The tour operator retained its guidance for the year after reporting a narrowed underlying loss for the first quarter of 2016.

Barclays declined 7.01 percent and HSBC lost 4.81 percent. Lloyds Banking Group weakened by 4.11 percent and Royal Bank of Scotland fell 4.08 percent. Standard Chartered also surrendered 5.09 percent.

Meda AB soared 67.23 percent in Stockholm, after it agreed to be acquired by Mylan.

The U.K. economy grew at a slightly slower pace in three months to January due to the weakness in the production sector, the National Institute of Economic and Social Research said Wednesday. The monthly estimates of gross domestic product suggested that output climbed 0.4 percent in three months ending January compared to a 0.5 percent expansion in three months to December.

Following last week's mixed monthly jobs report, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits fell by more than expected in the week ended February 6th.

The report said initial jobless claims dropped to 269,000, a decrease of 16,000 from the previous week's unrevised level of 285,000. Economists had expected jobless claims to edge down to 281,000.