Oil retreat leads US stocks lower; markets await ECB

US stocks finished sharply lower Wednesday, led by a retreat in petroleum-linked shares, while European markets awaited a European Central Bank meeting that could result in additional monetary stimulus. In the US, oil producers and oil-services companies suffered deep losses following a dive in oil prices after a Department of Energy report showed higher US oil inventories and production. That bearish data, coupled with expectations of no meaningful action in response to low oil prices at Friday's meeting of the Organization of the Petroleum Exporting Countries, sent US oil prices tumbling 4.6 percent, closing below $40 a barrel for the first time since late August. The Dow finished down 0.9 percent with oil giants ExxonMobil dropping 2.4 percent and Chevron 2.9 percent, the index's biggest losers of the day. In Europe, leading bourses traded in a tight range ahead of Thursday's ECB meeting. Some analysts thought the ECB would feel emboldened by weak inflation data to ramp up it quantitative easing bond-buying program. Inflation in the 19-nation eurozone was unchanged in November at just 0.1 percent, according to the EU's Eurostat statistics agency, well below the ECB's official target rate of below, but close to, 2.0 percent. "The eurozone’s inert inflation appears to give (ECB President) Mario Draghi the green light to increase his quantitative easing scheme tomorrow," said Spreadex analyst Connor Campbell London's FTSE 100 index added 0.4 percent, but Frankfurt posted a 0.6 percent drop and Paris fell 0.2 percent. - Yellen sees strong economy - The dollar climbed against the euro and other major currencies as traders focused on an expected gap in policy between the US Federal Reserve and other central banks. Federal Reserve Chair Janet Yellen, speaking at the Economic Club of Washington, said she expects the US economy will continue to grow strongly enough to support the first interest rate increase in nine years. Yellen did not directly address the Fed's plans at its next Federal Open Market Committee policy meeting on December 15-16, but analysts said the remarks added to confidence the Fed will hike the benchmark federal funds rate from near zero, where it has been pegged for nearly seven years. Meanwhile, the ECB, the Bank of England and Bank of Japan are pursuing accommodative policies. "There can be little doubt that the ECB will press ahead with further stimulus at its December meeting on Thursday," said IHS Global Insight economist Howard Archer. Among individual stocks, Volkswagen fell 1.8 percent after reporting a drop of 2.0 percent in German auto sales, the latest impact from its massive pollution-cheating scandal. Yahoo jumped 5.8 percent following reports the company is considering the sale of its Internet properties in light of uncertainty about the spin-off of its lucrative stake in Chinese e-commerce giant Alibaba. Chipmaker Qualcomm climbed 5.2 percent on news it reached a patent license agreement with Chinese smartphone company Xiaomi. - Key figures around 2200 GMT - New York - Dow: DOWN 0.9 percent at 17,729.68 (close) New York - S&P 500: DOWN 1.1 percent at 2,079.51 (close) New York - Nasdaq: DOWN 0.6 percent at 5,123.22 (close) London - FTSE 100: UP 0.4 percent at 6,420.93 points (close) Frankfurt - DAX 30: DOWN 0.6 percent at 11,190.02 (close) Paris - CAC 40: UP 0.2 percent at 4,905.76 (close) EURO STOXX 50: DOWN 0.3 percent at 3,468.66 (close) Tokyo - Nikkei 225: DOWN 0.4 percent at 19,938.13 (close) Euro/dollar: DOWN to $1.0619 from $1.0634 in late US trade on Tuesday Dollar/yen: UP to 123.81 yen from 122.86 yen