European stocks fall on fear of omicron, which maintains nervousness in markets

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By Elizabeth Howcroft

LONDON, Dec 2 (Reuters) – European stocks opened lower on Thursday, reversing yesterday’s gains as a lack of data on the omicron variant of COVID-19 led to volatility in markets, as investors also bet for an earlier reduction of stimuli by the Federal Reserve.

* The declining markets started on Friday on omicron fears. Investors are weighing the possible impact of new travel restrictions, amid signs that the variant could be more contagious than previous ones.

* On Wednesday, Wall Street showed some rebound but ended up declining after confirming the first case of the variant in the United States.

* The key information investors are waiting for is whether the spread of the virus translates into an increase in hospitalizations, as well as any comments from laboratories on how well vaccines against this variant work.

* At 0849 GMT, the MSCI World Stock Index, which includes stocks in 50 countries, was down 0.2%, after hitting its lowest level in 18 days.

* The European STOXX 600 fell 1.1%, erasing almost all the gains of the day before, although it was still above the low touched on Tuesday. Wall Street futures pointed to some recovery, with S&P 500 e-minis up 0.6%.

* Also weighed on stocks and flattened the yield curve of US bonds were the statements of Fed Chairman Jerome Powell, who said that a quicker end to the asset purchase program will be evaluated, which could open the door to earlier interest rate hikes.

* In his second day of testimony in Congress on Wednesday, Powell reiterated that the Fed must be ready to respond to the possibility that inflation will not recede in the second half of next year.

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