Oil Surge Weighs On European Markets Despite U.K. GDP Strength

(RTTNews) - European stocks pared early gains and slipped into negative territory on Wednesday as oil prices rebounded amid continued uncertainty about U.S. and Iran reaching a deal to end their conflict anytime soon.

Weak regional economic data hurt German and French stocks, while U.K. stocks slightly outperformed thanks to stronger than expected GDP data.

Investors looked ahead to U.S. inflation data for clues about Federal Reserve's likely moves with regard to interest rates.

Brent crude futures for December delivery climbed to $97.90 a barrel, gaining about 1.8%. Lingering concerns about energy supply due to a lack of progress in U.S.-Iran negotiations to reopen the Strait of Hormuz continued to render the oil market quite volatile.

The U.K.'s FTSE 100 was trading 0.17% up at 10,655.61, after having climbed to 10,727.68 earlier. Germany's DAX, which rose to 25,584.38, was down marginally at 25,356.91, while France's CAC 40 was down 0.44% at 8,000.59, coming off a high of 8,068.51. The pan European Stoxx 600 was down slightly at 637.58.

In Germany, Commerzbank shed about 2.7%. Vonovia, Siemens Healthineers, Allianz, SAP and Siemens were down 0.8%-1.6%.

Zalando, Porsche Automobil Holding and BMW moved up 3.3%-3.5%. Volkswagen climbed nearly 2%, while Fresenius, MTU Aero Engines, Mercedes-Benz, RWE and BASF gained 1%-1.6%.

In Paris, EssilorLuxottica, Stellantis and Pernod Ricard climbed 2%, 1.6% and 1.5%, respectively. Renault moved up 1.1%, while Hermes International, Kering, Air Liquide and Sanofi posted moderate gains.

Teleperformance dropped about 6%. TotalEnergies, Publicis Groupe, AXA, BNP Paribas, Bouygues, Carrefour, Vinci, Unibail Rodamco, Dassault Systemes, Eurofins Scientific, Engie and Edenred lost 1%-2.5%.

In the UK market, Antofagasta, Reckitt Benckiser, SSE, National Grid, Marks & Spencer, Severn Trent and United Utilities gained 2%-3%.

The Sage Group, Ithaca energy, Relx, Experian, BT Group, BP, Shell, LSEG and Rolls-Royce Holdings lost 0.9%-2%.

Kingfisher, British Land, JD Sports Fashion, Croda International, ICG, Anglo American Plc, Spirax Group and Rio Tinto also moved up sharply.

Data from the Federal Employment Agency showed Germany's unemployment increased more than expected in September, with the number of people out of work increasing by 12,000 from August, much larger than forecast of 1,000. This followed an increase of 5,000 in August.

At the same time, the unemployment rate remained unchanged at 6.4% in September. The rate also matched expectations.

Data from Destatis today showed that the adjusted jobless rate held steady at 4% in August. There were 1.76 million unemployed in August, up 9,000 from July, the labor force survey revealed. The unadjusted jobless rate rose to 4.3% in August from 3.9% in the last year.

Germany's retail sales grew 1.3% on a monthly basis in August, reversing a 3.2 percent fall in July, data from Destatis showed. Sales were forecast to climb 1.6%.

On a yearly basis, retail sales fell 0.4% but slower than July's 2.2% decrease.

Preliminary estimate from the statistical office INSEE said French inflation accelerated more than expected in September on energy and fresh food prices. Consumer price inflation rose to 3% from 2.4% in August. A similar higher rate was last seen in February 2024. The rate was also above economists' forecast of 2.8%.

EU harmonized inflation climbed markedly to 3.4% from 2.6% in the prior month. The rate was seen at 3%.

On a monthly basis, consumer prices in France declined 0.3%, reversing a 0.7% rise in August. Prices were forecast to fall 0.5%.

Likewise, the harmonized index of consumer prices slid 0.4%, in contrast to the 0.7% rise in the prior month. The HICP was also expected to drop 0.5%.

Another data from INSEE showed that producer price inflation in the domestic market advanced to 4.8% from 3.5% in July. On a monthly basis, producer prices grew 1%, following July's 1.3% increase.

Revised data from the Office for National Statistics showed the UK economy expanded more than estimated in the second quarter, with GDP posting a quarterly growth of 0.5%, revised up from 0.4%. This followed an increase of 0.6% in the first quarter.

In the second quarter, the services sector expanded 0.6% and construction grew 0.8%. On the other hand, the production sector shrank 0.1%. On the expenditure-side, there was a 0.3% increase in real household final consumption expenditure. Meanwhile, government spending dropped 0.5%.

Another data showed that ONS showed that the UK current account deficit, including trade in precious metals, narrowed by GBP 1.2 billion to GBP 19.9 billion, or 2.5 percent of GDP in the second quarter.