Europe midday: Shares still lower on UK turmoil, oil price hike fears

European shares were still lower at midday on Monday, as the UK government was forced into a humiliating u-turn on a planned tax cut for the wealthy and oil prices spiked on reports of output cuts by major producers.

At the start of the final quarter of the year, equities followed a weak trading session in Asia-Pacific markets. The pan-European Stoxx 600 index was down 0.71% in early deals, having been down 1.25% in early trade. Britain’s FTSE 100 was down 0.51% after Finance Minister Kwasi Kwarteng was forced to reverse a cut in the top rate of income tax after the measure sent the pound into freefall last week and threatened a rebellion by members of the ruling Conservative Party.

“Sterling is moving higher but has pared back its more convincing gains from earlier in the session, trading modestly in the green against the dollar, euro and Japanese yen,” said Victoria Scholar, head of investment, at Interactive Investor.

On oil markets, Brent crude futures and West Texas Intermediate futures jumped after reports that OPEC+ is considering an oil output cut of more than a million barrels per day.

In economic news, manufacturing activity in the euro area contracted at a faster cadence in September, as new orders slid.

The S&P Global eurozone manufacturing purchasing managers’ index (PMI) came in at 48.4 for September, compared to the downwardly-revised reading of 49.6 for August.

It was just below the market consensus, which had pencilled in a reading of 48.5. A PMI reading above 50 denotes expansion, while one below 50 signals contraction.

In equity news, Credit Suisse fell 9% after reports that the bank's executives spent the weekend reassuring large clients, counterparties and investors about its liquidity and capital position.

Carnival shares continued to slump after Friday's losses when the cruise operator said it was expecting to report a loss for the fourth quarter. Travel company Tui also lost ground, along with budget airlines easyJet and Wizz Air, as the prospect of higher fuel costs hit sentiment.

Logitech International fell after a downgrade for the computer equipment maker by Exane BNP Paribas. Just Eat Takeaway was down after a rating cut by JP Morgan.

Reporting by Frank Prenesti at Sharecast.com