by CORENTIN CHAPRON

PARIS (Reuters) – European stock markets ended cautiously higher on Wednesday, thanks to indicators confirming the slowdown in activity and prices in the euro zone and a drop in oil prices, but statements from central bankers are causing investors to hesitate.

In Paris, the CAC 40 gained 0.69% to 7,034.16 points, while the German Dax gained 0.51% and the British Footsie declined by 0.11%.

The EuroStoxx 50 index ended the session with an increase of 0.6%, compared to 0.31% for the FTSEurofirst 300 and 0.28% for the Stoxx 600.

Retail sales fell in line with economists’ expectations on Wednesday, while German inflation was confirmed at 3.0%.

The absence of surprises, either on the upside or on the downside, helped to reassure the markets which are worried about the persistence of inflation and the slowdown of the European economy.

Furthermore, the drop in the barrel of oil to its lowest in three months encourages risky assets.

However, investors remain cautious, while many monetary policy makers are making restrictive speeches in order to limit the loosening of financial conditions and keep their options open for the December meetings.

In Europe, members of the board of governors Philip Lane, Martins Kazaks and Joachim Nagel spoke on Wednesday of the persistence of underlying inflation, while member of the board of governors of the Federal Reserve Lisa Cook warned of the risks linked to to geopolitics.

The speech by Fed Chairman Jerome Powell, expected on Thursday, will be closely followed by the markets.

OIL

Crude oil plunges to its lowest since late July, after data released by the American Petroleum Institute showed a rise in crude inventories last week, and the Energy Information Administration warned Tuesday that U.S. demand would be less stronger than expected this year.

Brent fell 1.81% to $80.13 per barrel, American light crude (West Texas Intermediate, WTI) fell 1.96% to $75.85.

VALUES

Crédit Agricole rose 1.14% after reporting better-than-expected quarterly results on Wednesday, driven by the solid performance of its financing and investment division and retail banking activity.

ABN Amro published on Wednesday a net interest income lower than market expectations, and tumbled 9.24%.

Bayer reported on Wednesday a decline in its third-quarter profit and announced the elimination of several executive positions, which caused the stock to fall by 0.8%.

Marks & Spencer far exceeded its first-half profit forecast and said it expected a more than 30% jump in full-year profits, pushing the stock up 8.39%, among the best performances in the Stoxx 600. Danish brewer Royal Unibrew finished at the bottom of the Stoxx 600, down 12.49% to its lowest level in eight months, after reducing its EBIT forecast and publishing quarterly results lower than estimates.

A WALL STREET

Wall Street is hesitant in an uncertain context.

At closing time in Europe, the Dow Jones fell by 0.16%, the Nasdaq Composite by 0.13%, and the Standard & Poor’s 500 did not show any marked direction.

RATE

Long-term yields are declining in a wait-and-see environment.

At the close in Europe, the ten-year Treasury yield lost 4.4 bps to 4.5274%, while the two-year rate was stable at 4.9152%.

The German ten-year yield dropped 5.2 bps to 2.613%, while the two-year rate stagnated at 3.072%.

CHANGES

Foreign exchange markets remain calm after the dollar’s rebound at the start of the week and its decline last week triggered by the Fed’s pause.

The dollar is practically stable against a basket of reference currencies, while the euro nibbles 0.1% to 1.071 dollars. The pound sterling varies little at 1.2297 dollars.

(Written by Corentin Chappron, edited by Blandine Hénault)

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