Volkswacht Bodensee - Stocks fall, oil slides as rate-hope rally fades

Slowing US inflation lit a fire under global equities this week, cementing traders' views that the Federal Reserve would no longer need to hike interest rates and even fuelling talk of cuts next year.

Wall Street's main indices were just narrowly in the red two hours into the session after news that US industrial production declined more than expected in October by 0.6 percent.

London lost one percent and Paris 0.6 percent although Frankfurt bucked the trend with a small gain.

Oil prices fell around four percent meanwhile on concern about demand.

"The bounce in stocks has slowed dramatically, though the reasons to buy keep coming through," said Chris Beauchamp, chief market analyst at online trading platform IG.

"First it was CPI, then retail sales and PPI, and now comes a fresh fall in oil prices and yields, the two chief bugbears of stocks in recent months."

Company results also weighed on markets, with shares in Walmart tumbling seven percent after the retail giant narrowly lifted its full-year forecast but gave a cautious outlook on consumer spending.

Tech firm Cisco Systems slumped 12 percent as it projected weaker than expected sales in the upcoming quarter.

Shares in Chinese e-commerce giant Alibaba also plummeted in New York after it said it would cancel the spinoff of its cloud computing arm because of US curbs on chip exports.

In London, Burberry shares tumbled more than nine percent after the British luxury fashion house warned over future profits as global demand for high-end clothing weakens.

"Market optimism appears to be cooling off after a bumper period of gains for equity markets, built on growing expectations that the Fed are finished with their historic tightening process," noted Joshua Mahony, chief market analyst at Scope Markets.

Hong Kong, which jumped almost four percent Wednesday, led Asian losses Thursday as it gave up one percent.

"We're seeing a more muted session in financial markets on Thursday following a couple of days in which investors have been very encouraged by the economic data," said Craig Erlam, senior market analyst at trading platform OANDA.

- Biden, Xi hold talks -

Focus was also on US President Joe Biden and his much-anticipated talks with his Chinese counterpart Xi Jinping.

Biden described the talks as the "most constructive and productive" of their relationship, as the two sought some common ground after years of tensions.

"We've made some important progress, I believe," he told reporters.

The meeting in California resulted in agreements on several issues including high-level military communications and artificial intelligence.

Long-running tensions between the two global superpowers have weighed heavily on markets, with investors concerned about the impact on trade and geopolitics.

Later, Xi told US business leaders that China was "ready to be a partner and friend of the United States".

US markets also digested the passage of a stop-gap funding bill to keep federal agencies running for another two months and avert a painful holiday season government shutdown.

- Key figures around 1700 GMT -

New York - Dow: DOWN 0.4 percent at 34,848.17 points

London - FTSE 100: DOWN 0.9 percent at 7,410.97 (close)

Paris - CAC 40: DOWN 0.6 percent at 7,168.40 (close)

Frankfurt - DAX: UP 0.2 percent at 15,786.61 (close)

EURO STOXX 50: DOWN 0.3 percent at 4,302.45

Tokyo - Nikkei 225: DOWN 0.3 percent at 33,424.41 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 17,832.82 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,050.93 (close)

Euro/dollar: UP at 1.0852 from $1.0850 on Wednesday

Pound/dollar: UP at $1.2421 from $1.2414

Dollar/yen: DOWN at 150.55 yen from 151.37 yen

Euro/pound: UP at 87.37 pence from 87.36 pence

West Texas Intermediate: DOWN 4.3 percent at $73.34 per barrel

Brent North Sea crude: DOWN 4.0 percent at $77.92 per barrel

A.Ammann--VB