Europe close: Shares give back ground as pound weakens, oil falls

Profit-taking weighed on European shares on Tuesday, with some analysts pointing to the risk that heightened concerns about Brexit might add to the already uncertain market backdrop and as oil prices retreated from their surge on the previous day.

The benchmark Stoxx Europe 600 finished 1.22% lower, Germany's DAX was down by 1.64% lower and France's CAC 40 dipped 1.40%.

In London, the FTSE 100 slipped 1.25%, while a battered sterling took another leg lower as Brexit talk continued, with the bosses of just 36 firms on the index signing David Cameron's pro-EU letter. It was last at $1.4031, 0.81% weaker.

"There is an awful lot of political uncertainty, and that's taking its toll on the pound. If you get together all the leading economists, they still probably couldn't tell you what the UK's political and economic landscape would look like [if Britain left the EU]," Rabobank market strategist Jane Foley told Sky News.

Oil prices registered a sharp slide, with some market commentary linking the move to remarks from Saudi Arabia´s oil minister, Ali al-Naimi, that the country was loathe to pursue production cuts as there was a lack of trust - although he labeled an agreement to freeze output at current labels "the beginning of a process".

"The freeze I'm sure will give people in the market some hope, that something will happen and it will happen - but we are not banking on cuts because there is less trust," he said.

West Texas Intermediate surrendered 5.2% to finish at $31.74 per barrel, while Brent crude was 4.1% weaker to $33.31.

That saw the Stoxx 600 oil and gas index lose 2.32%, slipping back against the gains made on Monday.

A decision overnight by the People´s Bank of China to set a 0.17% weaker fix for the Chinese yuan - the largest decrease since 7 January - also weighed on stocks.

The situation somewhat echoed the rush to safe harbours seen earlier in the year.

Accendo Markets head of research Mike van Dulken noted: "The global risk rally continued to lose momentum overnight after another pullback by oil and industrial commodities, while the Chinese weakened the yuan to its lowest in six weeks and the Japanese yen and gold rose on renewed safe haven seeking."

On the corporate front, Standard Chartered shares plunged after the bank reported a £1bn loss, blaming the situation in Asia in 2015 and restructuring costs for the dip below the red line.

House builder Persimmon was ahead after posting a 34% increase in underlying profit before tax off a 13% rise in revenue. It was four years into its nine-and-a-half year long-term plan, with performance significantly ahead of initial expectations.

BHP Billiton was down in London after slashing its dividend deeper than most analysts predicted, and adopting a new, more cautious payout policy as it prepared for what it believed would be a prolonged period of low, volatile commodities markets.

Stock in fashion luxury chain Hugo Boss plummeted 19% after warning it now expected operating profits would fall at a low double-digit percentage rate in year-over-year terms because of weakness year-to-date in China and the US.

French food behemoth Danone was up after it posted a rise in 2015 profit and forecast like-for-like sales growth of 3% to 5% this year.

In data, the German Ifo survey's business climate index came in at 105.7 versus forecasts for 106.7 and a previous reading of 107.3.

The current assessment index rose to 112.9 from 112.5 the previous month, beating expectations for a reading of 112.0.

Finally, the expectations index printed at 98.8 compared with expectations for 101.6 and 102.3 in January.

Figures released earlier by the Federal Statistics Office confirmed that Germany’s gross domestic product rose 0.3% in the fourth quarter, in line with the third quarter, the initial estimate and consensus.

In calendar-adjusted terms, GDP grew 1.3% in the year compared with 1.7% in the third quarter, while unadjusted GDP grew 2.1% on the year. For 2015 as a whole, GDP increased 1.7%.