Scoreboard: German jitters

European markets slipped as weak German sentiment weighed on the region, while the Brent oil price fell to a 13-month low amid rising production levels.

In European economic news, Germany’s ZEW economic sentiment index fell from 27.1 to 8.6 -- the lowest level in 18 months and well below expectations. The ZEW current conditions index fell from 61.80 to 55.5. No surprise that the weakness was driven by the escalation of tensions between Russia and the West. News reports suggest a growing number of the 6,200 German firms active in Russia are warning about a hit to their business. The survey was based on 222 analysts and investors, and conducted between July 28 and August 11.

European shares fell on Tuesday as weak German sentiment data added to concerns of a slowdown in the region. Consumer goods group Henkel (down 5.3 per cent) warned earnings growth would slow in the second half of the year, partly because of the friction between Russia and Ukraine. The FTSEurofirst 300 index fell by 0.2 per cent with the German Dax lost 1.2 per cent and the UK FTSE closed mostly flat. Australia's major miners were mixed in London trade with shares in BHP Billiton down 0.5 per cent while Rio Tinto rose 0.4 per cent.

US sharemarkets eased on Tuesday, pressured by a slide in energy shares and worries over the weakness in the eurozone. Losses were broad with seven of the ten S&P sectors weaker. The Dow Jones index fell by 9 points or 0.1 per cent, with the S&P 500 index down by 0.2 per cent while the Nasdaq lost 12 points or 0.3 per cent.

US treasury prices were mixed as traders waited on upcoming auctions of a combined $40 billion of 10-year and 30-year notes later this week. US 2-year yields fell by 2 points to 0.44 per cent while US 10-year yields rose by 1 point to 2.45 per cent. 

The euro and commodity currencies were mixed against the US dollar as traders continued to worry about the impact of the Russia-Ukraine conflict on broader eurozone growth. The euro fell from highs near $US1.3370 to around $US1.3335 -- a nine month low -- before recovering and ending US trade near $US1.3365. The Australian dollar rose from lows near US92.50c to highs near US92.75c, ending the US session near its highs. The Japanese yen traded in a tight range between 102.35 yen per US dollar to JPY102.10, ending US trade near JPY102.20.

World oil prices fell on Tuesday. Brent fell to a 13-month low as increased OPEC oil production dampen concerns over supply disruptions in Iraq and Libya. OPEC output hit a five month high of 30.44 million barrels per day in July with a 300,000 bpd rise led by Saudi Arabia and Libya. Brent crude fell by $US1.55 or 1.5 per cent to $US103.02 a barrel while the US Nymex price fell by US71 cents a barrel to $US97.37 a barrel.

Base metal prices were mostly higher on Monday with the exception of copper (down 0.4 per cent). Zinc led the gains up 1.1 per cent.  Gold prices rose slightly on Tuesday with the Comex gold futures quote up by US10c to $US1,310.60 per ounce. Iron ore fell by $US1.30 on Tuesday or 1.4 per cent to $US94.00 a tonne. 

Ahead: In Australia, consumer confidence and wage price data for the June quarter are released. In the US, advanced retail sales and business inventories are released. Chinese retail sales, industrial production and fixed asset investment are scheduled.

Craig James is chief economist at Commsec.