European stocks mixed on oil, stimulus signals

Borrowing costs for the German and French governments fell to record lows Thursday on the prospect of quantitative easing in the struggling eurozone, while the euro slid further and stocks gained.

In Frankfurt the DAX 30 climbed 0.60 percent to 9,974.87 points and in Paris the CAC 40 rose 0.20 percent to 4,382.34 points.

London's benchmark FTSE 100 index was pulled down however by falling prices for energy company stocks after the OPEC oil cartel decided not to cut output despite a supply gut, ending off 0.09 percent at 6,723.42 points.

A signal by a senior ECB official on Wednesday that the central bank could begin major purchases of government bonds of eurozone countries sent the yields, or interest paid, on them down as investors tried to lock in returns.

The interest rate or yield on Germany's 10-year bond sank to 0.697 percent, below the previous all time-low of 0.719 percent that was hit last month.

France's 10-year note fell to an historic low of 0.993 percent from 1.051 percent on Wednesday.

"In an environment of plentiful liquidity in the global market, investors are driving down bond yields as investors anticipate further easing by the ECB," said Nick Stamenkovic, strategist at RIA Capital Markets.

The ECB has so far shied away from the mass purchase of government bonds to stimulate the economy, a policy known as quantitative easing or QE, but is under pressure to step up its efforts to combat stagnant growth and ultralow inflation.

- Pumped by QE prospect -

The ECB's deputy president Vitor Constancio signalled Wednesday it could begin purchasing government bonds as soon as next year.

"The ECB is clearly aiming to drive the euro lower as it attempts to expand its balance sheet, highlighting its accommodating monetary stance -- relative to the US Federal Reserve which is heading towards a normalisation of monetary policy," Stamenkovic added.

The European single currency dropped to $1.2474 from $1.2506 late in New York on Wednesday, as the bond buying programme would be tantamount to printing money.

Constancio's remarks came after ECB chief Mario Draghi recently hinted the bank was ready to act quickly to deter deflation.

Data released Thursday showed inflation in Germany slowed to its lowest level in nearly five years in November, at just 0.6 percent year-on-year this month, down from 0.8 percent in October.

Meanwhile, Spanish consumer prices fell for the fifth straight month in November, dropping by 0.5 percent.

The data added to concerns the region could be on the verge of deflation -- a sustained and widespread drop in prices that hampers economic activity and threatens job losses -- and piles more pressure on the ECB to act.

- Oil takes OPEC hit -

Meanwhile oil prices tumbled by more than five dollars per barrel after the OPEC oil cartel held its collective output ceiling despite a glut of supplies in the market having led oil prices to drop by over a third since June.

New York's West Texas Intermediate for January slumped to $67.75 a barrel -- the lowest level since late May 2010.

London's Brent North Sea crude for January delivery nosedived to $71.25 -- also a four-year trough.

A strong dollar and worries about stalling energy demand in a weak global economy have also contributed to the fall in oil prices.

Stock prices for oil companies took a hit following the OPEC decision.

In London, shares in Tullow Oil fell 7.2 percent to 464.9 pence, Royal Dutch Shell's B share gave up 4.3 percent to 2,265.5 pence, and BP shed 2.7 percent to 426.2 pence.

In Paris, Total lost 4.1 percent to 45.90 euros.

In Oslo, shares in Statoil slumped 4.4 percent to 143 kronor.

The OPEC decision also hit the ruble hard as over half of Russia's federal budget revenue comes from oil and gas exports.

The Russian currency shed 3.6 percent to briefly strike a new historical low mark of 48.66 against the dollar. It fell a similar amount to a record 60.92 against the euro.

On the London Bullion Market, gold slid to $1,194.75 an ounce, compared with $1,197.50 late on Wednesday.

Elsewhere, US markets were closed Thursday for the Thanksgiving holiday, and will open for shortened trade on Friday.