Europe midday: Oil price drop, currency volatility dampens sentiment

European stocks are under pressure heading into the end of the week, weighed down by an overnight drop in the price of oil and with investors carefully monitoring events ahead of the UK elections.

As of 1416 BST the benchmark Stoxx 600 was down by 0.25% to 391.16, alongside a drop of 0.34% for the Dax to 12,577.93 and a 0.65% slide in the FTSE Mibtel to 21,154.75.

Oil&Gas stocks were among the worst performers, with the corresponding Stoxx 600 subindex falling 1.05% to 309.63.

In parallel, euro/dollar had slipped 0.33% to 1.1175 and front month Brent crude oil futures were edging higher by 0.02% to $51.47 a barrel on the ICE.

However, on Thursday crude oil futures came under pressure as traders were apparently underwhelmed by OPEC's announcement of a nine-month extension to its supply cut deal.

"The negative oil reaction to a 9-month OPEC production cut extension is a prime example of ‘buy the rumour, sell the fact’. With nine months having become the baseline - prices +17% in the run-up, hoping for longer and maybe even deeper cuts - potential for an upside surprise was already limited.

"If anything, the simple extension begs questions about what happens next March and what OPEC’s long-term strategy is for combating rising US production and a prolonged global supply glut, to get prices back above $60," said Mike van Dulken and Henry Croft at Accendo Markets.

In the background meanwhile, a poll showing Prime Minister May's lead over her rival in Labour had shrunk to just five percentage points sent the pound down by 1% to 1.2814 against the US dollar.

Italian consumers were less optimistic in May, with ISTAT's consumer confidence index retreating from a reading of 107.4 for April to 105.4 for May.

An equivalent gauge of business sentiment also weakened, falling from 106.8 to 106.2.