Europe close: Stocks fall as Eurozone consumer prices drop more than forecast

European stocks declined as investors weighed Eurozone reports on consumer prices and unemployment along with US economic growth data.

The EU’s statistics agency said consumer prices fell 0.6% year-on-year, following a 0.2% decline in December amid sluggish oil prices. Analysts had pencilled in a 0.5% drop.

It marked the largest decrease since July 2009 and comes after the European Central Bank (ECB) announced a €60bn a month quantitative easing package to address the risk of deflation. The ECB is trying to move towards its target of just below 2%.

"January’s Eurozone consumer prices figures have brought further evidence that deflationary pressures in the currency union go well beyond the effect of falling energy prices," said Capital Economics chief European economist Jonathan Loynes.

The Eurozone unemployment rate dropped to 11.4% in December from 11.5% the previous month, compared to analysts’ estimates for no change.

The euro fell 0.26% to $1.1291 at close of trading.

US GDP

In the US, economic growth cooled more than expected in the fourth quarter. Gross domestic product (GDP) rose 2.6%, easing back from the previous quarter’s 5% and missing estimates of 3%.

“The slowdown in GDP growth should not be too concerning for the US economy,” said CEBR economist Sam Alderson. “Whilst the result [...] is disappointing when compared with the previous six months, the US economy is still carrying solid momentum moving into 2015.”

The University of Michigan’s consumer confidence index was unexpectedly revised lower to 98.1 in January from a previous estimate of 98.2.

Greece bailout, Russia rate cut

Greek finance minister Yanis Varoufakis has said the government will not cooperate with the EU and IMF mission bankrolling and will not seek an extension to the bailout programme.

Greece and EU will decide on the next move before the programme ends on 28 February, said Jeroen Dijsselbloem, head of the Eurozone finance ministers' group.

Meanwhile, Russia has unexpectedly cut benchmark interest rates amid concerns over an impending recession. The one-week auction rate was reduced to 15% from 17 %, the central bank said in a statement on its website Friday. Most analysts had predicted no change.

Banca Monte slides

Banca Monte dei Paschi di Siena SpA slipped after a report the Italian lender may raise more capital than previously planned.

Salvatore Ferragamo SpA rallied after reporting 2014 sales growth excluding currency swings that beat analysts’ estimates.

Lagardere SCA slumped following reports the French media group is negotiating with private-equity firms to fund a $1.2bn deal with World Duty Free SpA.

BT Group declined after reporting third-quarter earnings in line with analysts’ estimates.

International Consolidated Airlines was in the red after Qatar Airways bought a 9.99% stake in the British Airways owner.

Brent crude increased 0.58% to $49.42 per barrel, according to the ICE.