European stock markets slide

European stock markets slide

European stock markets slid Wednesday after sharp gains the day before, while oil prices drifted to new lows, as investors awaited the outcome of the US Federal Reserve meeting.

Oil prices extended their losses to fresh five-and-a-half-year lows, while the Russian ruble rebounded a bit after its recent plunge against the dollar.

Global markets have been in turmoil this week owing to concerns about the effect of plunging oil prices on energy firms as well as the crude-dependent Russian economy, which is also straining under Western sanctions.

Eyes were on the outcome to the Fed’s two-day meeting, with dealers looking for some guidance over monetary policy amid growing speculation that the central bank will raise interest rates by the middle of 2015.

The prospect of a tighter US monetary policy helped push up dollar, with the euro sliding to $1.2467 in morning trade from $1.2500 late in London on Tuesday.

In early trading, London’s benchmark FTSE 100 index was down 0.74 percent to 6,284.82 points, Frankfurt’s DAX 30 dropped 1.08 percent to 9,460.49 points and in Paris the CAC 40 retreated 0.90 percent to 4,056.45 compared with Tuesday’s close.

US stocks Tuesday finished lower following a topsy-turvy session amid unease over plunging oil prices and a crash in the Russian ruble, traders had said.

– Ruble support –

Russia’s finance ministry was Wednesday selling its foreign currency to support the ruble, a spokeswoman told AFP.

The Russian currency dived 20 percent during trading on Tuesday to 80 against the dollar and 100 to the euro, testing President Vladimir Putin’s ability to ride out both the country’s economic storm and his clash with the West.

The Russian central bank raised its key interest rate to 17.0 percent from 10.5 percent in a bid to prop up the currency, but the move “has failed to stabilise the ruble”, said Sebastien Barbe, head of emerging market research and strategy at Credit Agricole.

The rate rise and plunging oil prices suggest “a meaningful recession next year”, Barbe said in a note to clients.