European stocks drift lower amid eurozone fears

LONDON - European stock markets drifted lower yesterday on the first trading day of the New Year as investors fretted over the state of the economic recovery in the 19-country eurozone, a further fall in the price of oil and the upcoming election in Greece.

The euro was in retreat too after European Central Bank President Mario Draghi indicated the bank could soon back a further monetary stimulus.

KEEPING SCORE: In Europe, France's CAC 40 fell 0.4 percent to 4,258 while Germany's DAX fell 0.6 percent to 9,748. The FTSE 100 index of leading British shares was down 0.4 percent at 6,541. Wall Street was set for gains, however, with Dow futures and the broader S&P 500 futures up 0.3 percent.

DRAGHI HITS EURO: The euro fell to a 4 ½-year low against the dollar after Draghi indicated the bank could soon back a government bond-buying program to deal with alarmingly low inflation in the 19-country eurozone. In an interview with the German financial daily Handelsblatt, Draghi said the risk the bank won't fulfill its mandate to keep prices stable is greater now than it was six months ago. For many, that's a clear hint from Draghi that the bank stands ready to back a full-blown bond-buying program like the one undertaken by the US Federal Reserve. Many experts think the ECB could make the announcement Jan. 22 at its next monetary policy meeting.

EUROPEAN CONCERNS: Traders in Europe have a number of concerns as 2015 begins. As well as worrying about anemic levels of economic growth in the eurozone and lower oil prices, traders are concerned that the election in Greece on Jan. 25 may reignite the country's debt crisis if anti-austerity parties form the next government, as current opinion polls suggest.

THE QUOTE: "Fears that a considerably more anti-austerity party will take over from (Greek) Prime Minister Antonis Samaras and disrupt the fragile stability that currently exists around Europe look to be giving investors a more cautious trading mindset," said Alastair McCaig, market analyst at IG.

US DATA IN FOCUS: Wall Street traders are set for a busy return when the Institute for Supply Management publishes its closely monitored manufacturing report. The prevailing view in the markets is that the US economy will start 2015 where it left off — outperforming its peers. "Leading from the front and setting a more optimistic outlook is something the US spent much of 2014 doing," said McCaig.

ENERGY: One of the main themes across financial markets in 2014 was the sharp fall in the price of oil. On yesterday, it fell further with the benchmark US rate down 85 cents at $52.42 a barrel. Brent crude, the international standard, was down $1.24 at $56.09.

ASIA SCORECARD: Hong Kong's Hang Seng rose 1.1 percent to 23,857.82 and South Korea's Kospi added 0.6 percent to 1,926.44. Australia's S&P/ASX 200 gained 0.5 percent to 5,435.90. India's Sensex jumped 1.5 percent to 27,915.44. Markets in several countries including Japan and China were closed for New Year holidays.