European Stocks Slide As ECB's Nowotny Warns On Deflation

(RTTNews) - European stocks were lower Monday, trimming strong recent gains after a top official at the European Central Bank offered a gloomy assessment of the region's economy.

The ECB has dithered on full-scale quantitative easing, but there are increasing signals suggesting that stimulus is now imminent.

Ewald Nowotny, a member of the European Central Bank's governing council, warned today that the eurozone economy is suffering a "massive weakening."

Nowotny also said that eurozone inflation could fall even further in the first quarter of 2015.

His remarks were in line with ECB President Mario Draghi, who last week said that markets should expect the ECB will significantly expand its balance sheet in an effort to combat deflation.

Another round of a troubling economic data from Germany may have underscored the headwinds facing the euro zone economy.

Germany's industrial production growth slowed more than expected in October, data revealed. Industrial output grew 0.2 percent in October from a month ago, Destatis reported. Production was forecast to rise 0.3 percent after expanding by a revised 1.1 percent in September.

Looking at stocks, the Euro Stoxx 50 index of eurozone bluechip stocks lost 0.9 percent.

The German DAX lost 0.72 percent, the French CAC 40 slipped 1 percent and the FTSE 100 index of the U.K. dropped 1.05 percent.

Merck & Co. agreed to buy Cubist Pharmaceuticals Inc. for $8.4 billion in cash. Merck added 0.2 percent in Frankfurt.

K+S was down 1.5 percent. Goldman Sachs cut the stock to "Sell" from "Neutral."

E.ON was reduced to "Sell" from "Hold" at Berenberg. The utility fell 1.35 percent.

In Paris, Saint Gobain plunged 6.25 percent. The company plans to acquire a controlling interest in Swiss specialty chemicals firm Sika AG, by purchasing Schenker Winkler Holding AG.

Sika's management, who is not convinced by the deal, has decided to resign after the closing of the deal. The stock plumetted 22 percent in Zurich.

Air France-KLM, which reported traffic data for November, dropped 1.8 percent.

In London, Hargreaves Lansdown dropped 2.9 percent after its chief financial officer stepped down.

Lonmin shares dropped 6.1 percent after having to stop a furnace upon finding a leak.

Meanwhil, Oilex jumped 15 percent. The company said it is ready for commercial development of Cambay Field using multi-stage frac technology.