Europe open: Equities undermined as caution creeps in ahead of ECB meeting

European stocks were mostly lower in early trade, with caution setting in ahead of Thursday’s European Central Bank meeting as investors sifted through a raft of earnings.

At 0850 BST, the benchmark Stoxx Europe 600 index was down 0.5%, Germany’s DAX was flat and France’s CAC 40 was 0.2% weaker.

“Markets remain very quiet, with investor sentiment fragile and indices trading in a narrow range on low volumes,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

“Earnings results typically provide clear direction for investors, but the mixed results seen to date have not delivered either the clarity or support required to break the current lethargy. With global trade data remaining weak, investors are looking to central banks to provide the stimulus needed to support the market.”

With little of note due on the macroeconomic calendar, investors shifted their attention to Thursday’s ECB meeting in Malta. Market participants had been expecting the central bank to announce fresh stimulus measures, but these expectations have been scaled back following the release of a fairly upbeat bank lending survey on Tuesday.

The ECB report showed credit standards for Eurozone companies eased more than expected in the third quarter as banks made use of the central bank’s asset-purchase programme to grants loans.

“The APP had a net easing impact on credit standards and particularly on credit terms and conditions. The easing impact was greatest for loans to enterprises,” the ECB said.

Company news

Shares in education group Pearson tumbled after it cut its earnings guidance range for the full year by 5p to 70p-75p as it reported a 4% drop in third-quarter underlying sales.

Credit Suisse fell after announcing plans to raised $6.3bn in a capital increase.

On the upside, chip designer ARM Holdings surged after posting a jump in third-quarter pre-tax profit as revenue grew on the back of premium chip pricing and the broadening adoption of its technology. The company said it has entered the final quarter of the year with strong royalty momentum.

Sky gained as it reported a strong first quarter book, with new paid-for subscription products boosting the company’s revenue.

Consumer goods company Reckitt Benckiser was also on the front foot after lifting its full-year like-for-like sales growth estimate to 5% from a previous range of between 4% and 5% as it released better-than-expected third-quarter results.