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By Bloomberg

European stocks fell, dragged down by energy producers, as oil traded near a four-month low amid a global glut. The pound weakened after only one Bank of England policy maker dissented from keeping interest rates on hold, damping speculation for an increase anytime soon.

Shares of energy companies headed for their biggest decline in more than a week, sending the Stoxx Europe 600 Index down 0.5 percent at 8:08 a.m. in New York. U.S. equity-index futures were little changed. West Texas Intermediate crude retreated for a second day. The pound depreciated 0.6 percent to 70.33 pence per euro after the BOE voted 8-1 to keep rates on hold. Polish banks tumbled on government plans to aid mortgage holders.

U.S. oil production increased last week by the most since May, prompting speculation a supply surplus that drove prices into a bear market will be prolonged. The slide in commodity prices risks muddying the outlook for monetary policy makers just as the BOE and the Federal Reserve start to consider raising interest rates -- the BOE cut its near-term inflation outlook on Thursday. Investors are due to receive data on U.S. jobless claims before Friday’s monthly payrolls report.

“If oil hovers at a certain level then we assume it has bottomed, and then we are hit with another massive selloff,” said Ben Kumar, who helps manage about $14 billion at Seven Investment Management. “It’s hard to factor in what this will do to energy companies, and that gets people nervous. The real game in town is the Fed, and that will dominate thinking for most of August.”

The Stoxx 600 slipped after its biggest rally in three weeks, while the Standard & Poor’s 500 Index futures gained 0.2 percent.

Trailing Forecasts

Zurich Insurance Group AG lost 4.3 percent and Danish biotechnology company Novozymes A/S sank 11 percent after reporting profits that missed analysts estimates. Deutsche Post AG dropped 3.3 percent as it cut its full-year earnings forecast.

The MSCI Emerging Markets Index declined 0.7 percent, headed for the lowest close in two years, with benchmark gauges in Malaysia, Poland, Russia and Taiwan dropping more than 1 percent.

Russia’s ruble slid 1.1 percent to the weakest level since February and Malaysia’s ringgit extended losses at an almost 17- year low. South Korea’s won rebounded from near a three-year low as some investors judged recent declines excessive.

Saudi Arabia plans to sell as much as 20 billion riyals ($5.3 billion) of debt on Monday as the OPEC producer seeks to plug its budget deficit after oil prices plunged, two people familiar with the matter said.

Rising Output

Oil touched the lowest level in more than four months in New York after U.S. government data showed crude production rose 52,000 barrels a day to 9.465 million a day last week, the biggest gain since May. U.S. crude stockpiles remain more than 90 million barrels above the five-year seasonal average.

WTI fell 1.1 percent to $44.64 a barrel and Brent slipped 0.6 percent to $49.31. U.S. natural gas futures slid 1 percent, declining for a second day amid forecasts for cooler weather.

The yield on 10-year gilts fell one basis point to 1.96 percent. The BOE vote, with Ian McCafferty the sole dissenter, was unexpected as most economists forecast that at least two would push for tightening. Price growth will average just 0.3 percent this year, down from prediction of 0.6 percent in May, before accelerating to 1.5 percent in 2016, according to the BOE.

Sterling has climbed against every major currency except the Swiss franc this year in anticipation of an increase in interest rates by the BOE. It touched 69.36 pence per euro on July 17, the strongest since November 2007.

Rate Bets

Traders are pricing in a 48 percent probability that the Fed will raise interest rates in September, based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase. The odds jumped on Wednesday, pushing bonds lower in Europe and the U.S., after a report showed strengthening service-sector growth.

Italian and Spanish government debt recovered some of the losses on Thursday. Italy’s 10-year bond yield fell five basis points to 1.87 percent and Spain’s dropped six basis points to 2.02 percent.

Treasury 10-year note yields were little changed at 2.27 percent.

Polish banks slumped, sending the WIG20 Index down 2.4 percent. The gauge dropped the most in two weeks after parliament approved an unexpected change in a plan to provide financial aid to Swiss-franc mortgage holders, potentially doubling the cost for banks.

Chinese Shares

Chinese stocks retreated, with the Shanghai Composite Index dropping 0.9 percent. Volumes on the index have been falling amid concern government intervention designed to prevent another stock rout is driving away investors.

Greece’s benchmark ASE Index rose for the first time since trading was halted in June for five weeks and resumed Aug. 3. The gauge gained 3.4 percent after a three-day drop. National Bank of Greece SA climbed 22 percent and Alpha Bank AE gained 5.4 percent.

S&P 500 E-mini futures expiring in September were little changed after the index climbed for the first time in four days.

Tesla Motors Inc. fell 6.3 percent in early New York trading after the electric-car maker backed off its full-year vehicle sales forecast. Keurig Green Mountain Inc. tumbled 29 percent after the maker of single-serve coffee systems cut revenue and profit projections.

Viacom Inc. is among 14 S&P 500 companies reporting earnings on Thursday. Of the 426 S&P 500 companies that have reported results this season, about 74 percent beat analysts’ profit estimates, while 49 percent topped sales projections.

The Swiss franc declined to its weakest level in almost five months against the euro, as the economic outlook for the nation worsened. An index of Swiss consumer sentiment declined in July to minus 19, the worst reading since January 2012.