European stocks slipped closer to negative territory by mid-day Thursday as softer inflation data in Germany and Spain weakened the euro and concerns over the strident tone of Brexit negotiations between London and Brussels weighed on sentiment.
The euro has been under pressure for much of the session, falling 0.3% against the U.S. dollar to 1.0737 after a series of soft inflation readings from several German states and a slowing in headline consumer price rises in Spain raised concern that markets might have over-interpreted last month's European Central Bank rate decision and hints from President Mario Draghi of an early withdraw of stimulus.
The moves took their toll on financial sector shares, with the Stoxx Europe 600 Banks index falling 0.2% against a 0.07% gain for the broader Stoxx 600 benchmark. Deutsche Bank AG (DB) - Get Report was marked 2.2% lower at €15.80 each while France's biggest lender, BNP Paribas SA (BNPQY) , fell 0.74% to €61.51.
London's FTSE 100 edged 0.5 points into the red by 11:22 BST while Italy's FTSE MIB was trading 0.14% lower at 20,241.86.
U.S. equity futures are pointing to a weaker open on Wall Street, with the Dow Jones Industrial Average expected to fall 19 points at the bell, following on from Wednesday's 42 point decline. The broader S&P 500 is expected to fall 3.3 points while the Nasdaq is called 1.8 points lower.
In European trading, the pound was little-changed from Wednesday's close at 1.2438 as Britain's top Brexit negotiator, David Davis, prepares to present the so-called "Great Repeal Bill" to parliament today that is expected to reveal how the government will co-opt existing European legislation into British law while still providing room for future parliaments to make changes and remove unpopular statues.
This comes amid increasing concern that the tone of Brexit negotiations could worsen after Prime Minister Theresa May's Article 50 to European officials was deemed to have made put European security on the table next to trade talks. "Your Money or Your Lives", shouted a headline in The Sun, Britain's most-read newspaper, in a headline that reflects much of the media's post-Brexit coverage.
An early mover of note in European equity trading was H&M Hennes & Mauritz AB (HNNMY) , which posted stronger-than-expected quarterly earnings and said it would launch a new clothing line later this year amid an increasing difficult environment for European retailers.
However, shares in group fell to a four year low after analysts noted rising levels of inventories at the group and CFO Jyrki Tervonen warned of potential markdowns in the coming months as a result.
H&M was marked 6.2% lower at SEK222.60 in Stockholm, extending their three month decline to more than 12%.
The U.S. dollar, in that respect, continued its recovery from the early November lows it reached on Monday, with a key measure of its strength against a basket of six rival currencies rising to a nine-day high of 100.60 before paring gains to 99.92 by mid-day in London. The gains were linked to hawkish comments from various Federal Reserve officials, including Charles Evans, who suggested that four rate hikes for the 2017 calendar year are still likely, following the Fed's first increase on March 15.
Global oil prices slid in the wake of the dollar's gains, with WTI futures for May delivery falling 0.32% to $49.35 per barrel after data from the U.S. Energy Information Agency showed another increase in domestic crude stocks, which now sit at an all-time record of just under 534 million barrels. A surprise dip in gasoline stocks, however, and consistent speculation that OPEC members will agree to an extension of production cuts, continues to pressure prices, with Brent contracts also falling 0.33% to $52.25.
Stocks in Asia retreated overnight, however, with both Japan's Nikkei 225 (-0.88%) and the broader MSCI Asia ex-Japan (-0.24%) benchmarks posting losses in an otherwise tepid session of trading that was largely dominated by currency and oil market movements.