Europe midday: Stocks in the red as oil slips back; investors eye US data

European stocks fell on Thursday as oil prices retreated and investors awaited some key US data releases.

At midday, the benchmark Stoxx Europe 600 index was down 1.1%, Germany’s DAX was off 0.7% and France’s CAC 40 was 1.3% weaker.

At the same time, oil prices were in the red after data on Wednesday from the Energy Information Administration showed US crude stockpiles rose 2.3m barrels to 534.8m in the week to 25 March 25. This was the seventh week at record highs.

West Texas Intermediate was down 1.8% to $37.65 a barrel and Brent crude was 1.3% lower at $38.76.

The Stoxx 600 oil and gas index fell 1.6%.

Mike van Dulken, head of research at Accendo Markets, said Wednesday’s “Fed-sponsored rally” looks like it has already run its course.

“This will concern those bulls who have been patiently awaiting a FTSE and/or DAX breakout above recent highs, however, there is likely an element of month- and quarter-end profit-taking in progress after the strong bounces from 2016 lows. And don't forget markets often pause for thought before the US jobs report,” Dulken said.

In corporate news, French telecommunications stocks were under the cosh after Orange and Bouygues Telecom said they have extended the deadline to complete their tie-up to Sunday amid disagreements over the value of the telecoms unit.

Tui rallied after saying overall demand and pricing for holidays has remained resilient in the first half of its financial year. Tui said it has sold 47% of its summer holiday programme, in line with last year, and at 1% higher average selling prices, meaning revenue from the programme has been lifted 3%.

On the data front, a flash estimate from Eurostat showed the Eurozone consumer prices index improved in March but remained in negative territory at -0.1%, in line with consensus forecasts.

Eurozone CPI was improved from -0.2% in February.

Core CPI, which excludes more volatile prices such as fuel and food, rose to 1.0% from 0.8% the month before, beating predictions for a rise to 0.9%.

The slight improvement will be encouraging for European Central Bank president Mario Draghi, said analyst Naeem Aslam of Avatrade, but the improvement in the data was mainly due to recovery in the oil price.

Earlier, figures from Destatis showed German retail sales unexpectedly fell in February.

Retail sales were down 0.4% compared with the previous month, missing expectations of a 0.3% increase.

Meanwhile, January’s figures were revised lower to show a 0.1% drop compared with the 0.7% growth initially estimated.

Compared with the same month a year ago, however, retail sales rose 5.4%, which was a much bigger increase than the 2.2% forecast by economists.

Still to come on the macroeconomic front, investors will eye US initial jobless claims at 1330 BST and Chicago PMI at 1445 BST. Friday will see the release of the all-important nonfarm payrolls report.

Markus Huber, senior analyst at Peregrine & Black, said the main focus will be on the release of the Chicago PMI.

“Traders are especially eager to see if the Chicago PMI will be able to rebound after last month's reading of well below the important 50 level. Another weak reading could stir major worries concerning overall US growth in the months ahead.”