European Markets Finished Solidly Lower On Fed Tapering Concerns

(RTTNews) - The European markets extended their recent weakness Tuesday and finished in negative territory for a third consecutive session. Producer prices in the euro area decreased for the third consecutive month in October, with the rate of fall exceeding economists' expectations.

Investors were cautious ahead of the announcements from the policy meetings of both the European Central Bank and the Bank of England on Thursday. The better than expected U.S. manufacturing data released yesterday sparked concerns of an imminent reduction in asset purchases by the Federal Reserve. Investors will be watching for the release of the U.S. jobs report for November on Friday for further clues to how the Fed will likely proceed.

China's non-manufacturing activity growth eased in November amid weaker new order inflow, survey results published by China Federation of Logistics and Purchasing (CFLP) and the National Bureau of Statistics revealed Monday. The non-manufacturing purchasing managers' index, that measures activity across services and construction, fell to 56 in November from 56.3 in October.

The policymakers of Bank of England is all set to hold the interest rates unchanged, as economic indicators underline better prospects for growth and employment. The outcome of the 2-day meeting, which ends on Thursday, is unlikely to gain significant attention as the markets shift their focus to the Chancellor's 2013 Autumn Statement, also due on Thursday.

Although positive developments in public finance positions provide some room for Chancellor George Osborne for policy maneuver, he is likely to stick to his fiscal stance.

Members of the Bank of England's Financial Policy Committee, or FPC, are alert to housing market risks, minutes of the Committee's November meeting revealed Tuesday. The members "had become more concerned about the potential risks to financial stability that might arise from developments in the UK housing market," the minutes said.

The ongoing recovery of the British manufacturing sector, as the latest purchasing managers' survey showed, has eased concerns that the economic recovery is entirely dependent on an unsustainable housing market boom, Capital Economics UK Economist Samuel Tombs said.

According to the firm, the PMI survey for November showed that both output and orders of investment goods and intermediate goods grew at faster rates than for consumer goods, suggesting that the economic recovery is also becoming less dependent on household spending.

The survey provides only a small challenge to the view held by the Bank of England that inflation will remain very low and unemployment will take a long time to fall to the 7 percent threshold used for the MPC's forward guidance, the economist noted.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 1.86 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.31 percent.

The DAX of Germany dropped by 1.90 percent and the CAC 40 of France tumbled by 2.65 percent. The FTSE 100 of the U.K. decreased by 0.95 percent and the SMI of Switzerland fell by 1.79 percent.

In Frankfurt, Fresenius finished higher by 1.21 percent. Morgan Stanley upgraded its rating on the stock to ''Overweight'' from ''Equalweight.''

Metro dropped by 1.83 percent, despite Bernstein initiating the stock with an ''Outperform'' rating.

JPMorgan downgraded Continental to ''Neutral'' from ''Overweight.'' The stock fell by 2.19 percent.

Commerzbank and Deutsche Bank fell by 3.86 percent and 1.94 percent, respectively.

In Paris, BNP Paribas decreased by 3.19 percent. Nomura downgraded its rating on the stock to "Neutral" from "Buy." Societe Generale dropped by 3.26 percent and Credit Agricole lost 1.01 percent.

In London, mining stocks turned in a weak performance as metal prices turned lower. Antofagasta declined by 3.40 percent and Rio Tinto lost 0.96 percent. Fresnillo fell by 2.11 percent and Randgold lost 3.37 percent.

Smith & Nephew advanced by 1.91 percent after Morgan Stanley upgraded it to "Overweight" from "Equal weight."

William Hill gained 1.60 percent, after UBS upgraded its rating on the stock to "Buy" from "Neutral."

HSBC declined by 1.31 percent, after Nomura downgraded its rating on the lender to "Neutral" from "Buy."

Sweett Group plunged by 12.06 percent, after it announced first-half results.

Sonova fell by 1.76 percent in Zurich, after Morgan Stanley downgraded it to "Equal weight" from "Overweight."

Julius Baer lost 3.33 percent, after Nomura downgraded it to "Neutral."

HSBC upgraded Generali to ''Overweight'' from ''Neutral.'' The stock finished down by 1.31 percent in Milan.

Bernstein downgraded Repsol to ''Market-Perform'' from Outperform.'' The oil giant is dropped by 2.43 percent in Madrid

Industrial producer prices in the euro area decreased for the third consecutive month in October, and the rate of fall exceeded economists' expectations, latest data revealed Tuesday. The producer price index for the domestic market dropped 1.4 percent year-on-year in October, statistical office Eurostat said. This followed declines of 0.9 percent each in August and September. Economists had expected prices to fall 1 percent in October.

Unemployment in Spain declined for the first time in four months in November, the latest figures published by the country's labor ministry revealed Tuesday. The number of registered unemployed fell by 2,475 workers or 0.05 percent from a month earlier to 4.81 million. In October, the jobless total recorded an increase of 1.84 percent.

British construction sector activity grew at the sharpest pace in just over six years, led by solid expansion in output and incoming new work, a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) revealed Tuesday. The headline purchasing managers' index rose to 62.6 in November from 59.4 in October, signaling another strong upturn in the construction sector. The reading was the highest since August 2007.

Retail sales in the United Kingdom increased in November, according to data released Tuesday by the British Retail Consortium. BRC's monthly sales monitor showed overall retail sales up 2.3 percent in November. That follows a 2.6 percent gain in October.