Tumbling oil prices dragged most European stock markets down by hitting heavily weighted oil shares today, although a rebound in the dollar was a major plus for the region's exporters.
US light crude fell to as low as $40.45 a barrel and has now sunk more than 27 per cent from October's record high, after swing producer Saudi Arabia questioned the need for output cutbacks ahead of Friday's OPEC policy review.
US shares were seen opening broadly flat after falling sharply yesterday as the lower oil price dragged down US oil majors such as Exxon Mobil.
Mild winter weather in the United States and expectations that data will show another rise in US heating fuel inventories were seen keeping oil on a slippery slope and bashed stocks such as BP and Total.
The euro was quoted at $1.3220 against the dollar, having touched a record high of $1.3470 yesterday, and changed hands for about 104.70 yen.
The dollar rallied against rival currencies on end-of-year book-squaring and as forex dealers zoomed-in on the relatively weak economic outlook outside of the United States and scaled back expectations for non-US interest rate rises.
Currency strategists at Dresdner Kleinwort Wasserstein said European managers of international bond funds had turned negative towards the euro after Friday's weak US jobs data and taken profits on their previous long positions.
"With the end of the year in sight this part of the market is unlikely to add fresh risk to their portfolios," they said in a note to clients.