Europe open: Traders warily eyeing Brent futures, bond market

European stocks have started on a down note with traders keeping one eye on the slide in crude oil futures towards a key price level and the other on the flattening interest rate curve Stateside in the wake of Wednesday night's US central bank policy decisions.

As of 0902 BST, the benchmark Stoxx 600 was lower by 0.63% or 2.44 points at 385.14, alongside a drop of 0.63% to 12,725.66 for the German Dax and a 0.96% retreat in the Cac-40 to 5,192.85.

In parallel, front month Brent crude oil futures were dipping 0.24% to $46.89 a barrel following a large drop in the previous session on the back of government data showing an unexpected build in US gasoline inventories. Technical analyst Jose Maria Rodriguez at Web Financial Group continued to point to $46.64 a barrel as the 'make-or-break' level for Brent futures in the very near-term.

Commenting on the Federal Reserve's decision the day before to raise rates and flag a continued tightening bias, Jim Reid at Deutsche Bank said: "So where to now? Our US economics team have concluded that their expectations for Fed policy for the rest of this year are unchanged post the meeting.

"That is they continue to expect a formal announcement about unwinding the balance sheet at the September meeting, to start in October. They also expect a pause in the rate hiking cycle in September, followed by another rate hike in December, assuming that the economy evolves in line with the Fed’s expectations."

However, Reid also noted how the spread between two and ten year US Treasury note yields had fallen five basis points to 79 basis points, the least since September. In December it was at 136bp and the 2016 low at 75bp; below that last level it would be at its smallest since 2007.

To take note of as well, Reid believed the drop in crude futures did not go unnoticed in bond markets.

As expected, the Swiss National Bank kept all its main policy rates unchanged on Thursday morning.

In parallel, INSEE confirmed that harmonised French consumer prices rose by 0.9% year-on-year in May, which was less than the advance of 1.4% seen in April.

Meanwhile, in Italy the harmonised CPI for May printed at 1.6%, down from 2.0% in the prior month (consensus: 1.5%).

Still on the economic calendar for Thursday was a slate of US indicators, including the Philly Fed factory index for June.

Stock in Deutsche Bank was trading on the frontfoot after Bloomberg reported the lender was reorganising its corporate and investment banking division.

Italy's state railways Ferrovie dello Stato chose Nomura to advise it on a possible flotation on the Milan bourse, Reuters reported.