Europe close: Chemicals stocks lead losses, oil also a drag

European stocks slipped going into the close of trading to end the day lower as crude oil futures headed lower on reports of recovering output in Canada and stock in German chemicals firm Bayer was marked down after reports it might be studying making a bid for US rival Monsanto, with another peer, BASF, said to also be waiting in the wings.

The benchmark DJ Stoxx 600 surrendered 1.63 points or 0.49% to end the day at 333.11, the Dax was lower by 113.20 points or 1.13% at 9,862.12 while Paris's Cac lost 23.40 points or 0.54% to finish at 4,293.27.

Bloomberg reported Bayer had discussed a possible bid for Monsanto internally and with advisers. That drove shares in €78.45bn-market cap Bayer lower by 4.5% and saw the Stoxx 600 sub-index of Chemicals stocks end the day down by 2.0% at 758.33.

Shares of Basic Resource companies were also weak, dropping 2.48% to 262.59.

Acting as a backdrop, as expected the Monetary Policy Committee tweaked its guidance to reflect the possibility of a certain easing bias given the uncertainty weighing on economic activity at present.

In a clear warning, Bank of England Governor admitted the UK might be pushed into recession as the country cut many of its ties with the European Union.

The Committee said “it is more likely than not that Bank Rate will need to be higher by the end of the forecast period than at present”.

Following its previous meeting it had said: “it is more likely than not that Bank Rate will need to increase over the forecast period”.

"On the face of it, this seems to leave the door ajar to near-term easing, followed by higher rates, perhaps if Britain voted to leave the E.U. next month," Pantheon Macroeconomics said in a research report sent to clients.

Cable was little changed on the heels of the MPC meeting, edging higher by just 0.01% to 1.4450 by the end of trading in London.

Industrial production in the euro area shrank by 0.8% month-on-month in March, coming in well below the flat result expected by markets.

French consumer prices dipped at a 0.2% year-on-year rate in April following a 0.1% retreat in the month before, weighed down by falls in prices for manufactured goods. Core inflation on the other hand was steady.

As expected, Norway's central bank kept its main policy rate unchanged at 0.50%.

Dutch insurer Aegon reported a weaker than expected first quarter underlying pre-tax profit of €462m, sending the stock promptly lower by 11%.

That came alongside a 71% drop in quarterly net income at French lender Credit Agricole.

LafargeHolcim's - the world's biggest cement maker - operating profits shrank more than expected in the first quarter following last year's merger.

Stock in Zurich Insurance Group AG jumped 7% after Switzerland’s top insurer cheered investors with better-than-expected profit.

German electricity outfit RWE AG rocketed following its own first quarter numbers.

Euro/dollar was moderately lower by 0.37% to 1.1382 by the end of trading and front month Brent crude futures off by 1.248% to $45.66 per barrel on the ICE.