(Updates, adds Wall Street outlook)
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 24 (Reuters) - Gloomy economic news, including
the sharpest decline in German business sentiment since 9/11
sent European equities down on Thursday, overshadowing steady
oil below $125 a barrel and positive financial sector earnings.
Wall Street also looked set for a weak start.
The euro fell against the dollar and euro zone government
bond prices jumped to break a six-session losing streak after
the Munich-based Ifo economic research institute said German
corporate sentiment declined by more than expected in July to
its lowest level in nearly three years.
The monthly drop in the Ifo index was the steepest since the
Sept. 11, 2001 suicide attacks on the United States, and took
the index to its lowest level since September 2005.
It was compounded by the RBS/Markit Eurozone Purchasing
Managers Index for services companies which fell to a five-year
low and by euro zone manufacturing activity remaining in
negative territory.
"It's really bad," said Gilles Moec at Bank of America.
The pan-European FTSEurofirst 300 <> was down close to
1.2 percent.
The economic news overwhelmed more stock-positive events
that included Credit Suisse <CSGN.VX> beating expectations with
its second-quarter earnings report.
That lifted the DJStoxx European banks index <.SX7P> despite
the overall falls.
Earlier, Japan's Nikkei average <> rose 2.2 percent to
a four-week closing high, as Toyota Motor Corp <7203.T> and
other carmakers led gains by exporters on a softer yen versus
the dollar and the drop in oil prices.
The benchmark added 290.38 points to end at 13,603.31. The
broader Topix <> climbed 2.2 percent to 1,332.57.
OIL STEADY, DOLLAR RISE, BONDS JUMP
Oil dipped to seven week lows due to increasing signs that
high prices and economic weakness are slowing demand.
U.S. light crude <CLc1> fell as low as $123.62 a barrel, the
lowest since early June. It was trading at $124.83 later.
Crude has now fallen more than $23 a barrel from its record
high peak above $147 on July 11.
"We do not see any factors to push up (oil) prices at all at
the moment," said Tetsu Emori, a fund manager at Astmax Co Ltd
in Tokyo.
The euro hit a two-week low against the dollar after the
slew of soft euro zone data cooled expectations of higher
interest rates.
The euro was down a slender 0.1 percent on the day at
$1.5665 <EUR=>. It earlier slipped as low as $1.5637 immediately
after the Ifo report.
Two-year euro zone bond yields <EU2YT=RR> were 14 basis
points lower at 4.453 percent, while 10-year bond yields
<EU10YT=RR> were 7 basis points lower at 4.590 percent.
