Europe close: Rise in single currency weighs on shares
A late bout of selling sent stocks lower as traders pushed the single currency higher going into the end of the year.
By the close of trading, the benchmark Stoxx 600 was down by 0.26% or 1.0 point at 389.54, alongside a fall of of 0.55% to 5,339.42 for the Cac-40 and a drop of 0.36% for the FTSE Mibtel to 22,120.95.
The German Dax, which is heavily weighted towards exporters, fared worst, surrendering 0.69% to end the day at 12,979.94.
Meanwhile, the US dollar spot index was 0.45% lower to 92.61 while euro/dollar headed in the opposite direction, tacking on 0.49% to trade at 1.1960.
On Wednesday, the yield on the benchmark 10-year US Treasury note declined by seven basis points to 2.41%, pushing the spread with the yield on two-year government debt to the near-decade low hit in early December, which had in turned weighed on the dollar.
Come Thursday, government bonds on both side of the Atlantic were retracing the prior session's moves, but more so those from euro area countries, meaning that yields were climbing faster on this side of the Pond.
Commenting on those movements in the US Treasury market, Craig Erlam, senior market analyst at Oanda, said: "The US dollar is trading lower for a second day on Thursday, still struggling after yields on Treasuries slipped on Wednesday. The flattening of the yield curve has triggered concerns that investors are possibly pricing in a slowing of the economy or even a recession and while this has historically happened on such expectations, I'm not convinced this is the case this time.
"Given the current environment, it's possible that this is more a reflection of longer term interest rates and the low inflation environment than the economic prospects. Still, if yields on long term US debt don't rise or even fall as the Fed raises interest rates, it could fuel fears of an impending recession."
In the background, deadly attacks overnight in Russia and Afghanistan reminded investors of the current difficult geopolitical backdrop.
On Wednesday evening, the explosion of a home-made bomb sowed chaos in a St.Petersburg supermarket, wounding at least 10 shoppers.
Further afield, a suicide attack on an office of Afghan Voice, in Kabul, claimed at least 40 victims.
On the corporate front, Lufthansa was in the spotlight after Germany's anti-trust officials queried for further information on ticket prices after receiving complaints of price hikes in the wake of rival Air Berlin's demise.
Elsewhere, four of Italian lender Intesa San Paolo's top executives will step down in coming days, local daily Il Messaggero reported.
In other news, Standard&Poor's revised its outlook on the long-term corporate debt of Fressenius Medical Care from 'stable' to 'positive'.