Europe midday: Energy shares pace the decline as BP tumbles

European stocks fell in early trade, with energy issues pacing the decline following dismal results from oil major BP as oil prices slid.

At midday, the benchmark Stoxx Europe 600 index was down 1.6%, France’s CAC 40 was 1.8% lower and Germany’s DAX was off 1.1%.

“There is still plenty of uncertainty making the rounds where global growth in the months ahead is concerned leading to investors remaining inclined not only to take early profits on winning positions but also staying rather risk averse in general,” said Markus Huber, senior analyst at Peregrine & Black.

“German employment data this morning came in much better than expected however its impact on the market should be limited especially as potential layoffs in the automobile sector resulting from the Volkswagen scandal might still be on the cards later in 2016.”

Huber added that sentiment remains negative for now, with a renewed test of the lows of the year likely.

“At this stage only cheaper share prices or more detailed and imminent central bank action will bring buyers back into the market.”

In corporate news, BP shares tumbled after the oil giant reported a fourth quarter loss of $3.31bn, with underlying profits down a whopping 91% to $196m. The company posted an annual loss of $6.5bn, which was its worst in 20 years.

BP dragged its peers lower and pushed the Stoxx 600 oil and gas index down 4.4%.

Swiss bank UBS was also firmly under the cosh after pre-tax profit at its investment bank came in weaker than expected.

Alfa Laval AB slumped after the Swedish engineering group’s fourth-quarter pre-tax profit fell short of expectations.

German chip maker Infineon Technologies was also in the red after its first quarter results disappointed.

On the upside, Danske Bank A/S advanced after the Danish lender lifted its dividend and announced a share buyback plan.

Supermarket retailer Sainsbury’s rose after it agreed an offer with Home Retail that values the FTSE 250 group at about £1.3bn. Home Retail shares edged higher on the announcement.

Oil prices were in the red again as investors became less hopeful of a deal between OPEC and non-OPEC nations to cut production, with West Texas Intermediate down 3% at $30.68 and Brent crude down 3.2% at $33.15.

Meanwhile, investors digested a raft of data releases.

Figures from the Federal Labor Agency showed the German unemployment rate dropped to 6.2% from 6.3% the previous month, better than the 6.3% expected and marking its lowest level since German reunification.

Meanwhile, the number of people out of work was down a seasonally-adjusted 20,000 to 2.73m following a revised 16,000 decline in December, versus economists’ expectations for a drop of 7,000.

In the Eurozone, the unemployment rate fell to a seasonally-adjusted 10.4% in December, down from 10.5% in November and 11.4% the same month in 2014, data from Eurostat showed.

This marked the lowest rate since 2011 and beat economists’ expectations for an unchanged reading of 10.5%.

The number of people unemployed fell by 49,000 from November to 16.75m. For 2015 as a whole, the number of unemployed people was down 1.5m.

Eurozone producer prices fell 0.8% in December from November and 3% compared with the same month in 2014.

Economists had been expecting a 0.6% drop on the month and a 2.8% fall on the year.