Europe midday: Stocks nudge lower as investors sift through data

European stocks edged lower on Tuesday as investors digested a batch of data releases at the start of a busy week.

At midday, the benchmark Stoxx Europe 600 index and France’s CAC 40 were both down 0.3%, while Germany’s DAX was 0.4% weaker. The lacklustre trading came at the start of a week that will see a number of important events such as the European Central Bank rate announcement on Thursday and the US non-farm payrolls report on Friday.

At the same time, oil prices were mixed as the production of Canadian oil resumed and investors looked ahead to this Thursday’s meeting of the Organization of the Petroleum Exporting Countries. West Texas Intermediate was up 0.2% at $49.44 a barrel while Brent crude was down 0.6% at $49.47.

Morgan Stanley said the OPEC meeting was unlikely to end in anything other than a statement of support for the current condition of oil markets.

“Renewed faith in the strategy and higher prices work against intervention, as do personnel changes and recent policy failures. Many OPEC members also have plans to grow, so cutting supply now may interfere with those objectives. That said, low expectations and limited positioning ahead of the meeting do suggest that any surprise could have an outsized impact,” the bank said.

Investors in the UK got their first chance to react to the latest comments by Federal Reserve Chair Janet Yellen, who said on Friday that a rate hike in the coming months “would be appropriate” if the economy and labour market continue to show an improvement.

“No doubt much of the general talk impacting market action is still about a US rate hike either in June or July. “However traders are not only increasingly confident that the US economy is strong enough to withstand another hike but also that the Fed won't pull the trigger if this would mean that the US economy is being put at risk,” said Markus Huber, a trader at City of London Markets.

“Trading volume should be on the light side as not all traders will be back in the markets in the aftermath of public holidays in the US and the UK yesterday.”

In corporate news, German car maker Volkswagen skidded after posting a 20% drop in first-quarter profit.

French car maker Peugeot Citroen was in focus following a report the Peugeot family is planning to hold talks with the French government to discuss the future of its stake in the company.

In London, shares IG Group rallied after the spreadbetting firm said it expects earnings for the year to be slightly ahead of views after a solid fourth quarter.

It was a lot busier on the data front, as figures from Eurostat showed the unemployment rate in the Eurozone was 10.2% in April, unchanged from March and in line with expectations.

The rate was down from 11% in April of last year and marks the lowest recorded in the euro bloc since August 2011.

In the European Union, unemployment came in at 8.7% in April, down from 8.8% the month before and from 9.6% in April 2015.

This is the lowest rate recorded in the EU28 since April 2009.

Meanwhile, an initial estimate from Eurostat revealed that deflation in the euro area eased in May. The consumer price index fell an annualised 0.1% in May, as expected by analysts, compared to a 0.2% drop in April.

The improvement was driven by increases in food, alcohol, tobacco and non-energy industrial goods. However, energy prices continued to fall, albeit at a slower pace.

Core inflation, which excludes volatile items such as food and energy, rose 0.8% year-on-year in May which was in line with forecasts and followed a 0.7% increase in April.

Earlier, figures from Destatis showed German retail sales unexpectedly fell in April. Retail sales were down 0.9% on the month, versus expectations for a 0.9% increase. Still, this was better than the 1.4% drop seen in March.

On the year, retail sales were up 2.3%, beating economists’ expectations of a 1.9% jump.

Still to come in the US, personal income and spending figures are at 1330 BST, while S&P/Case-Shiller home prices are at 1400 BST. Chicago PMI is at 1445 BST and consumer confidence is at 1500 BST.