Europe close: Stocks fall back as natural gas futures leap

European stocks fell back on Tuesday as natural gas futures leaped higher on the back of Russia's announcement the day before of a further cut to its gas supplies to Germany, claiming maintenance issues.

Also dragging on investor sentiment, the International Monetary Fund lowered its forecasts for euro area economic growth in 2022 and 2023, warning that worst outcomes still were possible - including from a full halt of Russian gas supplies.

"European stocks have lagged their UK counterparts today, as Russia continues to manipulate gas flows as a tool to damage economic growth in the region," said IG senior market analyst Josh Mahony.

"The Kremlin’s claims that another gas turbine has ‘some problems” provides the basis for further supply restrictions, which in turn will likely push Europe into a recession sooner rather than later."

The pan-European Stoxx 600 index was little changed, drifting just 0.03% lower to 426.13, helped by the UK’s mining-heavy FTSE 100 outperforming.

The FTSE Mibtel on the other had retreated 1.04% to 21,159.98 and the German Dax was down by 0.86% at 13,096.93.

Euro/dollar on the other hand fell 0.93% to 1.0125 alongside a near $38% leap for TTF natural gas futures to $214,01MWh.

According to one source familiar with the situation cited by Bloomberg, the technical issues with the Nord Stream pipeline were real.

However, other Russian sources cited by Bloomberg indicated that the Kremlin was indeed using the pipeline issues to raise the political heat on European leaders.

Unilever rose after the consumer goods giant it raised its full-year sales forecast.

Shares in Swiss chocolate maker Lindt & Spruengli jumped after an upbeat outlook. Swiss bank UBS fell after posting a smaller-than-expected rise in second-quarter net profit.

Budget airline easyJet's shares dipped even as it narrowed losses and despite taking a £133m hit from the travel chaos that has led to hundreds of flight cancellations due to staff shortages.

Oil producers Orron Energy and Equinor both gained on a higher oil price.