Europe midday: Energy issues and banks push stocks lower

European stocks fell into the red on Monday, with energy issues under the cosh as oil prices slid again.

At midday, the benchmark Stoxx Europe 600 index was down 2.1%, Germany’s DAX was 2.5% weaker and France’s CAC 40 was down 2.2%.

Oil prices reversed earlier gains to trade lower again as worries about oversupply took hold, with Texas Intermediate down 2.3% at $30.18 a barrel and Brent crude 2.1% weaker at $33.36.

This pushed the Stoxx 600 oil and gas index down 2.4%. Banks were also lower, with the sub index for that sector down 2.9%.

“European markets after initially opening higher, have been led sharply lower by banking shares, a number of which are hitting multi-year lows. The disappointing earnings across the sector from the big US firms to Credit Suisse and Deutsche Bank in Europe alongside the ugly spectre of negative interest rates have seen investors significantly reassess the chance of an earnings turnaround after years of regulatory fines for past misdeeds,” said Michael Hewson, chief market analyst at CMC Markets.

“With investors looking to mull over Friday’s mixed payrolls report attention is now shifting to Fed Chair Janet Yellen’s meeting with US lawmakers on Wednesday and Thursday with respect to further clues as to the possible timing of the next rise in US rates. One thing seems certain, is that further stock market volatility looks likely to keep the Fed on the sidelines.”

As equity markets slumped, investors opted for the relative safety of gold, boosting prices in the yellow metal to a three-month high.

In corporate news, BT Group nudged lower after it confirmed reports that it is looking for a new group finance director.

Aerospace and defence group Rolls-Royce was in the red amid growing expectations the company will slash its dividend this week for the first time in 25 years.

HSBC shares dropped, with the bank set to announce this week that it intends to keep its headquarters in London.

Assa Abloy was weaker after the lock maker’s fourth-quarter results missed expectations.

Danish enzyme maker Novozymes was lower after the company said it was splitting into three divisions and announced changes to its executive leadership team.

Shares in French supermarket operator Casino bucked the trend after it said it has agreed to sell its majority stake in Thai supermarket Big C Supercenter for €3.1bn excluding debt.

Randgold Resources racked up solid gains after delivering record output for 2015, although profits slipped.

Air France-KLM was also on the front foot after posting a 3% rise in year-on-year traffic in January.

Credit Suisse edged up following press reports the bank’s chief executive officer, Tidjane Thiam, has asked the board to cut his 2015 bonus by between 25% and 50%.

In macroeconomic news, results of a survey by Sentix showed Eurozone investor sentiment slipped for the second month in a row in February.

The investor sentiment index came in at 6, down from 9.6 the previous month and well below expectations for a reading of 8.8. This marked the lowest reading since April 2015.