Europe midday: Stocks in the red as resources drop; oil slides

Basic resources paced the decline in European stocks on Wednesday, with energy issues also under the cosh as oil prices slid.

At midday, the benchmark Stoxx Europe 600 index and France’s CAC 40 were both down 2.1% while Germany’s DAX was 2.3% lower.

Mike van Dulken, head of research at Accendo Markets, said equity markets were "backtracking from valiant attempts to deliver breakouts”.

“The driver? I'm afraid it's oil again, and markets are also coming round to the fact that there is a distinct absence of good news doing the rounds to keep the major indices up around recent highs. OPEC's mouthpiece Saudi Arabia has said no to global production cuts on account of a lack of trust. A freeze is about as likely given Iranian and Iraqi reluctance. Oh and the cartel's Secretary General has as good as admitted that US Shale has become the de-facto swing producer, which will only serve to hinder any oil price rally.”

Basic resources suffered the brunt of the losses, with the Stoxx 600 index for the sector down 5.2%.

Energy issues were also in the red, with the sub-index for that sector down 2.9% amid weaker oil prices, as Saudi Arabia ruled out any production cuts and data showed a build-up in US crude stockpiles.

Data from the American Petroleum Institute showed crude inventories rose 7.1m barrels last week to 506.2m, surpassing expectations for a 3.4m increase. Comments from Iran also weighed, after it said proposals to cap output were “laughable”.

West Texas Intermediate was down 3.3% at $30.83 a barrel and Brent crude was 2.3% lower at $32.51.

Despite the decidedly downbeat tone, corporate news was pretty cheery.

Wolters Kluwer rallied after Dutch business information and publishing company’s 2015 results came in better than expected.

London-listed housebuilder Barratt Developments was also on the front foot as it reported a 40% rise in first half profit.

German healthcare provider Fresenius advanced after saying it intends to lift 2016 net income by between 8% and 12%.

French car maker Peugeot raced ahead after it announced a return to profit in 2015, while Bouygues nudged higher after the company’s full year net profit beat analysts’ expectations.

There are no major Eurozone data releases due so eyes will be on the US, where the Markit services PMI is at 1445 GMT and new home sales are at 1500 GMT.