Europe close: Stocks end lower as oil futures retreat

European stocks reversed an early advance to finish lower in choppy trade as oil prices surrendered their gains and investors digested a disappointing reading on German economic sentiment.

Stocks kicked the session off in the black on positive Asian cues and surging oil prices but by the close had all slipped lower, save for London’s FTSE 100 which advanced 0.65%.

The benchmark Stoxx Europe 600 index was down 0.43% by the close of trading, Germany’s DAX was off 0.78% and France’s CAC 40 was 0.11% lower.

Oil prices pared gains after oil ministers from Saudi Arabia, Russia, Qatar and Venezuela meeting in Doha agreed to freeze output on Tuesday, but said the deal was contingent on other producers such as Iran.

Saudi minister Ali al-Naimi said holding production at January levels was adequate, adding that other measures to stabilise the oil market could be considered.

Nevertheless, investors were doggedly skeptical that Tehran might yield to pressure to freeze its output.

Indeed, after the close of trading Dow Jones Newswires reported that Iran’s energy minister had said the country had no immediate plans to cap its output, although it might reduce it once it had returned to pre-sanction levels.

West Texas Intermediate crude futures ended the session down by 1.61% at $29.24 a barrel and Brent crude was lower by 2.4% to $32.61.

The Stoxx 600 oil and gas index came off earlier highs, retreating by 0.38%, while a gauge of bank stocks surrendered 0.62% to end the day at 141.68 points.

“Market disappointment that production has not been cut, but rather stabilised is causing a widespread sell-off in risk assets,” said IG market analyst Joshua Mahony.

Uninspiring data added to the downbeat mood, as the ZEW survey showed German investor confidence deteriorated in February, albeit a little less than expected.

The indicator of economic sentiment fell to 1.0 point from 10.2 the previous month, versus economists’ expectations for a reading of 0.

The index that gauges investors’ and analysts’ assessment of the current situation in Germany fell 7.4 points from the previous month to 52.3, missing forecasts of 55.5.

Meanwhile, the indicator of economic sentiment for the Eurozone fell 9.1 points to a reading of 13.6 points, versus expectations for a reading of 10.3. The assessment of the current situation slipped 0.5 points to -8.0.

Pantheon Macroeconomics said : “A marginal beat of the consensus for the expectations index offers scant consolation. This is a poor report, consistent with weakness in the Sentix survey earlier this month. The expectations index is now almost as low as during the aggressive sell-off in Q4 14, which prompted the ECB to throw caution to the wind and launch QE.”

On the corporate front, Anglo American was a touch higher after it reported a pre-tax loss of $5.5bn after $3.8bn of write-downs since the half year, as it unveiled its promised “radical” overhaul of the business to combat crumbling commodity prices.

HeidelbergCement finished in the red despite lifting its savings target by a third to €400m.

Michelin racked up gains after the tire maker reported a 19% jump in full year earnings.

Orange also gained after the French telecoms group said it returned to core profit growth in 2015 a year ahead of plan.

On the downside, Standard Chartered was under the cosh after Investec downgraded the stock to ‘hold’ from ‘buy’.

Vodafone eked out a small gain after announcing it has agreed with Liberty Global to merge the companies’ operations in the Netherlands.