European stocks cool as traders assess Venezuela fallout, economic data

EUROPEAN stocks ended flat on Wednesday, snapping a run of record closes as investors paused to digest the latest US-Venezuela developments and sifted through a fresh batch of economic data.

Even though markets have mostly shrugged off the recent uptick in geopolitical risk, investors turned more cautious after President Donald Trump said the US had struck a deal to import US$2 billion of Venezuelan crude, an agreement expected to boost supply.

Oil prices fell on the remarks. In London, energy heavyweights Shell and BP slid over 3 per cent each, dragging Europe’s broader energy sub-index down 2.2 per cent.

The pan-European Stoxx 600 index closed flat at 604.99 points, a day after notching a record closing high.

“We are seeing, I wouldn’t say necessarily caution, there’s sort of a pause in the rally as investors continue to weigh the geopolitical developments,” said Fiona Cincotta, senior market analyst at City Index.

“There is an element of caution about potentially what Trump may do next.”

Data to drive sentiment

Traders also sifted through a steady flow of economic data releases. Euro zone inflation cooled to 2 per cent last month, capping a surprisingly tame year for prices across the bloc, even as investors debate the lagged effects of US tariffs, German economic stimulus measures and renewed geopolitical strains.

The softer inflation print lifted rate-sensitive corners of the market. Real estate and construction stocks were among the biggest boosts to the benchmark index.

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A lower interest-rate environment helps reduce borrowing costs and makes financing easier for purchasing assets.

Banks were the biggest drag, losing 1.7 per cent.

Global investors also digested US figures. Job openings fell more than expected in November after a modest rise in October, while a separate ADP report showed private payroll growth slowed in December.

The unemployment rate in Germany, euro zone’s largest economy, rose less than expected in December. On the other hand, retail sales in November fell unexpectedly.

The benchmark in Germany rose 0.92 per cent, while indexes in Spain and Italy fell 0.29 per cent and 0.43 per cent respectively. All three had hit all-time peaks a day earlier.

In France, data showed that consumer confidence rose in December. The CAC 40 index was little changed.

Thales rose to its highest level in over two months after Covivio and Blue Owl Capital agreed to acquire sites of the French defence company for around 500 million euros. The shares closed up 8.3 per cent.

Chip equipment maker ASML fell nearly 1 per cent, snapping a six-day winning streak, its longest since November.

Nestle dipped 2.1 per cent after brokerage firms Jefferies and Bernstein lowered their price targets on the stock. The company on Tuesday said it was recalling some batches of its infant nutrition products due to possible contamination with a toxin that can cause nausea and vomiting. REUTERS