Europe open: Stocks continue to pull back after recent rally

European stocks markets were mostly in the red for the second straight day as investors continued to take profits following the recent rally and show caution ahead of some key inflation figures later in the week.

The Stoxx 600 index was down 0.6% at 455.69 by 0940 CET, following a 0.1% fall on Monday. Prior to this week, though, the Stoxx 600 had risen over 7% since hitting a 2023 low of 429 on 27 October.

"The rally since the end of Oct has really been about the central bank narrative – pause and cuts to come soon seems to be the thinking. That may be premature," said Neil Wilson, analyst at Finalto.

Figures on Thursday are expected to show the annual rate of US PCE inflation slowing to 3.1% in October from 3.4% in September, with the core rate falling to 3.5% from 3.7% – which would be the slowest rate since April 2021. Meanwhile, eurozone annual CPI inflation is also forecast to ease to 2.8% from 2.9%, with the core gauge declining to 3.9% from 4.2%.

Meanwhile, oil prices were recovering after recent falls, with Brent crude up 0.9% at $80.58 a barrel ahead of a closely anticipated OPEC+ meeting on Thursday.

In company news, Dutch biotech group Argenx saw shares drop 16% after results from a study of its bleeding disorder drug showed weak results.

French videogame publisher Ubisoft also dropped after the placement of bonds convertible or exchangeable for new or existing shares.

UK-listed engineering group Rolls-Royce was a high riser after unveiling its mid-term financial targets for 2027 and beyond. The company expects to achieve an operating profit within the range of £2.5bn to £2.8bn, and an operating margin of 13% to 15%.