European shares fell on Wednesday maintaining a gloomy trend set in Asia and the United States, and with concerns about a global glut of oil looming over the market.

Mixed results from the continent’s banking sector and losses in the mining sector pushed the pan-European STOXX 600 index down 0.6 per cent.

The losses came after oil prices fell more than 1 per cent on Wednesday as a report showing a surge in US crude stocks, rising production in Nigeria and squabbling among producers about a planned output cut re-ignited concerns about oversupply.

Brent crude futures were down 51 cents at one stage at $50.28 a barrel before recovering slightly to $50.40.

“The recent drop in oil prices is partially responsible but also indices continue to struggle for momentum as they attempt to break above their recent highs,” said Craig Erlam, senior market analyst at OANDA.

Reports of US oil inventories rising more than expected last week were contributing to oil price declines, he said.

Traders said squabbles within the Organization of the Petroleum Exporting Countries (OPEC) about a planned output cut later this year were also weighing on oil markets.

Iraq, OPEC’s second biggest oil producer, wants to be exempt from the cut, arguing it needs the revenues to fight Islamic State.

Another factor behind European and Asian stock price weakness was disappointing results and forecasts from US companies on Tuesday - most notably with Apple recording declining iPhones sales.

The MSCI world equity index, which tracks shares in 46 countries, is down 0.08 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.8 per cent, while Japan’s Nikkei reversed earlier losses to close up 0.15 per cent as the yen pulled back.

European equities were also edgy as investors digested a slew of earnings reports, with commodity-related stocks and with British bank Lloyds under pressure, though well-received results from Santander buoyed Spanish stocks.

Antofagasta led the losses in the mining sector, dropping 6.5 per cent.

Carney effect

In currency markets, sterling recovered from Monday’s lows after Bank of England (BoE) governor Mark Carney said in a speech the central bank could not ignore the effect of sterling’s slide on inflation.

This increased expectations that policymakers would leave rates unchanged next week.

Sterling rose 0.12 per cent against the dollar to $1.2198, coming off Monday’s trough of $1.2081, which was the lowest level since the October 7 “flash crash".

The euro, which slid to a 7 1/2-month low of $1.0851 on Tuesday, recovered to end the session flat, and was trading little changed at $1.0887 on Wednesday.

With investors looking ahead to US third-quarter gross domestic product data on Friday, the dollar index, which tracks the greenback against a basket of six global peers, fell 0.20 per cent to 98.513.

It hit its highest level since February 1 on Tuesday as traders saw a better than 78 per cent chance of an interest rise hike by the Federal Reserve in December, according to CME Group's FedWatch tool.

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