By Chris Prentice and Amanda Cooper
NEW YORK/LONDON (Reuters) -Global stocks were down and major Wall Street indexes fell on Thursday after the European Central Bank cut interest rates for a fourth time this year, as gold prices slid from a five-week high.
European stocks finished lower in choppy trading after the European Central Bank cut interest rates and kept the door open to further easing in 2025 in the face of a struggling economy and heightened political risks.
The Swiss franc weakened after the Swiss National Bank cut rates by half a point, its largest reduction in nearly 10 years. Markets had priced a good chance of a half-point cut in the run-up to Thursday's meeting.
The U.S. Labor Department's producer price index (PPI), which tracks the prices U.S. companies get for their goods and services at the figurative factory door, jumped by 0.4%, leap-frogging over the 0.2% consensus and marking an acceleration from October's upwardly revised 0.3% gain.
The U.S. dollar rose.
Oil prices dropped as a forecast for ample supply in the oil market offset optimism stemming from rising expectations of a U.S. interest rate cut.
MSCI's gauge of stocks across the globe fell 3.32 points, or 0.38%, to 868.07.
Wednesday's inflation reading showed the consumer price index (CPI) rose exactly in line with expectations in November, supporting bets for a Federal Reserve interest rate cut next week.
"The market has essentially seen one of the last remaining obstacles that could derail sentiment out of the way," said Chris Weston, head of research at Pepperstone. "Seeing the coast somewhat clearer for the illustrious seasonal chase of returns to play out into year-end."
Traders now place a 97% chance on a quarter-point Fed cut on Dec. 18.
The Dow Jones Industrial Average fell 234.44 points, or 0.53%, to 43,914.12, the S&P 500 fell 32.94 points, or 0.54%, to 6,051.25 and the Nasdaq Composite fell 132.05 points, or 0.66%, to 19,902.84.
The pan-European STOXX 600 index closed down by 0.1%, although rate-sensitive euro zone bank shares edged up 0.3%.
Traders were pricing in 125 basis points worth of interest rate cuts by the ECB by the end of 2025, according to data compiled by LSEG.
"The ECB is on a direct path of consecutive quarter-point cuts until the deposit rate reaches 2%. This market expectation is now being reinforced by even lower economic forecasts," said Jochen Stanzl, chief market analyst at CMC Markets (LON:CMCX).
Emerging stocks rose 0.39%.
The yield on benchmark U.S. 10-year notes rose 6.3 basis points to 4.334%, from 4.271% late on Wednesday.
CENTRAL BANK FOCUS
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.41% to 106.99, with the euro down 0.23% at $1.047.
The greenback retreated against the yen after Reuters reported that BOJ policy makers were inclined to forgo a hike on Dec. 19 and wait for more data on wages at the start of next year.
The Australian dollar turned lower against the dollar. Earlier, it surged on unexpectedly strong employment data, rebounding from Wednesday's weakness following a Reuters report that Beijing is considering allowing the yuan to depreciate further next year. China is Australia's top trading partner and the Aussie is often used as a liquid proxy for the yuan.
Although economists were almost unanimous in predicting Thursday's move by the ECB, many had acknowledged that a bigger cut would also be justified given a deteriorating growth outlook and rapidly retreating inflation.
In commodities, spot gold fell 1.39% to $2,680.59 an ounce as investors took profits and squared positions ahead of next week's Fed meeting. U.S. gold futures settled 1.7% lower at $2,709.40.
Crude oil retreated after rallying this week on the threat of additional sanctions aimed at stifling Russian oil output.
U.S. crude settled down 0.4% to $70.02 a barrel and Brent finished at $73.41 per barrel, down 0.15% on the day.