Europe midday: Stocks in the red after weak data

European stocks fell on Tuesday, with cyclicals under pressure as soft data releases prompted growth concerns, and as oil prices declined.

At midday, the benchmark Stoxx Europe 600 index was down 1.7%, France’s CAC 40 was 2.1% weaker and Germany’s DAX was down 2.3%.

Macroeconomic news weighed on sentiment as figures from the Deutsche Bundesbank showed German factory orders unexpectedly dropped in February.

Factory orders fell 1.2% on the month, marking their lowest reading in six months and missing economists’ expectations for a 0.3% increase.

Still, the January reading was revised up to show a 0.5% rise from a 0.1% fall.

On the year, factory orders were up 0.5%, falling short of expectations of a 2.2% increase.

Services data for the Eurozone were not particularly encouraging either.

Markit’s final Eurozone composite output index came in at 53.1 in March, a touch higher than February’s reading of 53 but below the flash estimate and consensus of 53.7.

The downward revision of the index between the flash estimate and final reading was mainly driven by France and Italy, which combined explained 0.5 points out of the 0.6 point downshift.

The final Eurozone services business activity index printed at 53.1, down from the flash estimate of 54 and below February’s 53.3 reading.

It wasn’t all bad news on the macro front, however, with retail sales in the Eurozone rising 0.2% on the month in February versus expectations of a flat reading.

On the year, sales in the 19 countries that share the euro rose 2.4%, beating economists’ expectations of a 1.9% increase.

Investors also digested comments from International Monetary Fund managing director Christine Lagarde and Chicago Federal Reserve President Charles Evans.

In a speech at a German university, Lagarde cautioned that risks to global growth were rising as she urged the world’s economies to boost growth.

Evans said in Hong Kong that markets were more pessimistic than the Federal Reserve in their pricing of US interest rate hikes.

Oil prices were lower amid ongoing supply glut concerns as hopes of a coordinated freeze agreement at the upcoming meeting in Doha fade. West Texas Intermediate was down 0.8% to $35.43 a barrel and Brent crude was 0.9% lower at $37.37.

This weighed on the Stoxx 600 oil and gas index, which dropped 2.7%.

With worries about growth on investors’ minds, cyclical stocks – whose performance is closely tied to the overall economy – took the brunt of the selling, with the Stoxx 600 basic resources index down 3.9% and the corresponding sub-index for banks off 2.7%.

In corporate news, Peugeot Citroen skidded after its chief executive officer outlined plans to return to consistent sales growth.

French hotels group Accor was also on the back foot after announcing the acquisition of UK home rental company Onefinestay for €148m (£118m).

Tesco was weaker after Deutsche Bank downgraded the stock to ‘hold’ from ‘buy’.