Europe close: Stocks edge lower as oil, confidence declines

European stocks edged lower at close on Monday as oil prices retreated and investors digested a weaker-than-expected reading on German business confidence.

The benchmark Stoxx Europe 600 closed down 0.53%, Germany’s DAX was 0.76% weaker and France’s CAC 40 was 0.52% lower.

At the same time, oil prices lost even more ground heading into US trading, with Brent crude down 0.24% at $45.00 per barrel and West Texas Intermediate down 0.81% at $43.38.

The Stoxx 600 oil and gas index was down 1.36% while the sub-index for basic resources was 3.7% weaker as metals prices declined.

The mood was dampened by the earlier data from Munich-based research institute Ifo, which showed German business confidence unexpectedly deteriorated in April.

Ifo’s business climate index printed at 106.6 compared to 106.7 in March and expectations for a reading of 107.

Meanwhile, the current assessment index came in at 113.2 from 113.8 the month before, versus estimates of an unchanged reading.

The expectations index nudged up to 100.4 from 100.0 but was a touch shy of forecasts of 100.8.

Capital Economics said the data added to signs of a slowdown.

“While expectations edged up in April, the current conditions index weakened. And it is somewhat disappointing that sentiment has failed to recover fully from the falls seen at the start of the year, which at the time were widely put down to temporary fears about the global economy.”

Disappointing US home sales data also cooled things, with sales of new single-family homes unexpectedly falling in March, marking the third month in a row of official declines.

Figures released by the Commerce Department showed new home sales dropped 1.5% to an annual rate of 511,000 from an upwardly-revised 519,000. Economists had been expecting a pace of 520,000.

Compared to the same month a year ago, sales were 5.4% higher. Meanwhile, the median price of a new home was $288,000, down 3.1% from February.

Investors were also looking ahead to rate announcements from the Federal Reserve and the Bank of Japan on Wednesday and Thursday, respectively.

With the Fed widely expected to stand pat this time, eyes will be on the BoJ amid speculation it might extend its negative rate policy by adopting a policy of negative rates on loans.

On the corporate front, shares in France’s EDF were sharply lower after it announced late on Friday that a capital increase had been approved. On Monday chief executive Jean-Bernard Levy told a French radio station the company would have to press ahead with the nuclear-reactor project at Hinkley Point if it wants to continue to have nuclear power in France.

Philips shares were also under the cosh after the company said its first-quarter profits took a hit from tax charges on the back of its separation of the lighting business.

In London, Imperial Brands - formerly known as Imperial Tobacco - was the standout gainer as Goldman Sachs upgraded the stock to ‘buy’ from ‘neutral’ following recent underperformance.

Heavily-weighted mining stocks were the worst performers as metals prices slipped, with Anglo American, BHP Billiton, Rio Tinto and Glencore all firmly on the back foot.