Europe close: Equities stage a late session recovery despite closing in the red

LONDON (ShareCast) - European equity markets finished in the red on Thursday as geopolitical tensions in the Middle East allowed the bears to overcome the bulls. Saudi Arabia overnight launching air strikes on neighbouring Yemen triggered a wave of selling across Asian and European markets early Thursday.

Naturally, oil prices, which are sensitive to geopolitical tensions in the Middle East due to oil supply, spiked with WTI crude and Brent rising as high as 5% each.

By late afternoon in Europe, both had eased from session highs to trade up 4% and 1.3% respectively, as concerns about a prolonged offensive started to fade.

Late afternoon in Europe, the selling pressure eased across Eurozone stock markets, due in part to a recovery Stateside with the Dow Jones Industrial Average and S&P500 both trading flat - moving up from session lows on the back of improving weekly jobless claims.

Late in Europe, blue-chip stocks finished lower but were far off their worst levels of the day. The German DAX was off 0.2%, the French CAC-40 was down 0.3% and the Spanish IBEX 35 finished flat. The broader Stoxx Europe 600 index fell 0.7%. The UK's FTSE 100 under-performed, down 1.4%.

Economic data comes in strong A slew of upbeat Eurozone economic data offered the bulls some inspiration as data showed the Spanish economy grew by 0.8% in the first quarter of 2015 and France's deficit narrowing faster than anticipated to 4% of GDP in 2014, from 4.3% in the previous year.

Lending data from the Eurozone, commonly known as M3 (Other OTC: MTHRF - news) , pointed to improvement in the 17-nation bloc economy, indicting the European Central Bank's stimulus measures were in effect.

Data showed lending to firms and households rose on the month in February, with loans to corporates rising by €8 billion and loans to households by €1bn. Moreover, the broad monetary aggregate M3 was up 4% in February in annual terms, above January's growth of 3.7%.

Speaking of the ECB, head honcho Mario Draghi said the central bank's bond-buying programme will boost Eurozone economic recovery in a speech to policymakers in Italy's parliament. Draghi said that recent economic figures "are comforting about the contribution that monetary policy is supplying to reinforce the cyclical recovery".

Greece in focus, euro gains Events surrounding Greece's financial situation remained unclear after the country was legally denied by EU finance ministers to dip into the region's bank bailout fund on Wednesday.

On Thursday however, Greece's Economy Minister George Stathakis threw some optimism to the market by reportedly saying that the government could reach an agreement with EU finance ministers by 'next week.' Elsewhere, In the FX market, the euro had a roller-coaster of the session as it earlier responded favourably to the better sounds out of Eurozone data, which helped it to move above the $1.10 mark against the US dollar after sagging to a 12-year low earlier this month.

At 16:50 GMT, the euro fell 0.4% to change hands with the US dollar at $1.09214, surrendering gains to a rising greenback thanks to the improving US weekly jobless claims.

Similarly, the British pound erased session gains to trade 0.2% lower against the advances made by the US dollar despite the strong UK retail sales figures released earlier in the session. The pound was last seen switching hands at 1.48566.

In company news, advertiser Havas (LSE: 0MGT.L - news) slumped 4.9% after French billionaire Vincent Bolloré launched an accelerated placement to sell about 17% of his majority stake in French advertising group.

Airliner Lufthansa's shares tumbled 4% as investors remained concerned about the future of the airline's Germanwings business and its reputation following a crash in the French Alps which killed everyone on-board. Latest developments suggest one of the co-pilots locked the other one out of the cockpit before starting the jet's descent lower.

In the aerospace and defence sector, Airbus shares lost 0.8% after it raised €1.64bn from the sale of a 17.5% stake in Dassault Aviation (Paris: FR0000121725 - news) . Meanwhile, in the telecoms sector, Telefonica shares fell 1.1% after it announced on raising €3bn in a rights issue to help fund the purchase of Vivendi (Swiss: VIV.SW - news) 's Brazilian unit GVT.