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European Markets Finish Mostly Lower As Spanish Banks Tumble

The majority of the European markets ended Wednesday's session in the red. Concerns over further political upheaval in Spain had investors in a negative mood. Shares of Spanish banks were particularly weak.

Traders were also in a cautious mood ahead of speeches from both Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi. Investors are also looking forward to the release of the U.S. jobs report for September on Friday.

The European Central Bank on Wednesday asked banks to set aside more cash to fully cover loans that are classified as bad from the start of next year and also to submit strategies to reduce the huge pile of bad debt.

Banks must provide full coverage for the unsecured portion of new non-performing loans, or NPLs, after 2 years at the latest and for the secured portion after 7 years at the latest, the ECB said in its proposal.

The pan-European Stoxx Europe 600 index weakened by 0.12 percent. The Euro Stoxx 50 index of eurozone blue chip stocks decreased 0.30 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.11 percent.

The DAX of Germany climbed 0.53 percent, but the CAC 40 of France fell 0.08 percent. The FTSE 100 of the U.K. declined 0.01 percent and the SMI of Switzerland finished higher by 0.00 percent.

In Frankfurt, ThyssenKrupp tumbled 2.43 percent. The multinational conglomerate said that workers will be equally represented following the planned merger of its European steel operations with Tata Steel's.

BMW advanced 2.48 percent, Daimler gained 1.08 percent and Volkswagen climbed 2.26 percent after unveiling their monthly U.S. sales figures.

In London, Royal Dutch Shell declined 0.90 percent. The oil & gas company has cancelled the $900m sale of its stake in a Thai gas field to Kuwait Foreign Petroleum Exploration Company.

Oil & gas exploration company Tullow Oil retreated 1.72 percent as oil extended losses near $50 a barrel on signs of higher output.

Retailer Tesco dropped 3.21 percent after posting second-quarter sales below estimates.

Royal Mail lost 2.60 percent after workers voted in favor of an industrial action.

Standard Life weakened by 3.75 percent after its chairman reportedly backed the controversial listing of Saudi Aramco in London.

Spanish banks succumbed to selling pressure after King Felipe VI said Catalan authorities deliberately bent the law with "irresponsible conduct" and the state needs to ensure Spain's constitutional order and rule of law.

Banco de Sabadell fell 5.69 percent, Santander lost 3.82 percent and BBVA tumbled 3.61 percent.

Eurozone retail sales decreased for the second straight month in August, defying economists' forecast for a rebound, data from Eurostat showed Wednesday. Retail sales volume fell 0.5 percent month-over-month in August, following a 0.3 percent drop in July. Meanwhile, economists had expected a 0.3 percent rise for the month.

The euro area private sector ended the third quarter strongly as output growth accelerated to a four-month high, underpinned by new orders in September, final data from IHS Markit showed Wednesday. The composite output index rose to 56.7 in September from 55.7 a month ago. The score matched the preliminary estimate.

The UK services sector growth improved unexpectedly at the end of the third quarter, though slightly, survey data from IHS Markit and Chartered Institute of Procurement & Supply showed Wednesday.

The services Purchasing Managers' Index, or PMI, climbed to 53.6 in September from August's 11-month low of 53.2. Economists had expected the index to remain stable at 53.2.

Shop prices in the United Kingdom were down 0.1 percent on year in September, the British Retail Consortium said on Wednesday, threatening to emerge from deflation for the first time in four years. The September reading follows the 0.3 percent decline in August.

Employment in the U.S. private sector climbed by slightly more than anticipated in the month of September, according to a report released by payroll processor ADP on Wednesday. ADP said private sector employment rose by 135,000 jobs in September after surging up by a revised 228,000 jobs in August.

Economists had expected employment to climb by 125,000 jobs compared to the 237,000 job jump originally reported for the previous month.

Activity in the U.S. service sector grew at a notably faster rate in the month of September, the Institute for Supply Management revealed in a report on Wednesday.

The ISM said its non-manufacturing index jumped to 59.8 in September from 55.3 in August, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 55.5.

by RTT Staff Writer

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