Europe open: Resource, energy stocks under pressure as oil price slides

European stocks fell in early trade following strong gains in the previous session, with basic resources and energy issues pacing the decline as oil futures retreated.

At 0905 GMT, the benchmark Stoxx Europe 600 index was down 0.6%, Germany’s DAX was 0.7% weaker and France’s CAC 40 was off 0.4%.

Oil prices were back in the red after Monday’s surge, as market participants worried about the impact of growing Iranian output. West Texas Intermediate was down 2.3% at $32.61 a barrel while Brent crude was 2.4% lower at $33.87.

“The close relationship between equities and oil this year is one of the chicken and the egg. Economists have been scratching their heads because a lower oil price should be an economic stimulus and a positive for stocks,” said CMC Markets’ Jasper Lawler.

“What is actually happening is that oil and share prices are not moving to economics but simply represent markets where risk is either on or off. This rapid switching between risk on and off (high volatility) all comes back to the attempted withdrawal of unprecedented monetary stimulus from the Federal Reserve."

In corporate news, BHP Billiton was under the cosh after slashing its dividend by 75% and reporting a $5.67bn net loss for 2015. The Stoxx 600 basic resources index, which rose sharply in the previous session, was down 2.1%.

Emerging markets focused bank Standard Chartered slumped after saying it swung to an annual loss in 2015.

On the upside, though, housebuilder Persimmon rallied after posting a 34% increase in full year pre-tax profit.

InterContinental Hotels Group was also in the black after it announced a $1.5bn special dividend.

France’s Thales advanced after lifting its dividend and reporting better-than-expected core profit for 2015.

Danone pushed higher after the French food company posted a rise in 2015 profit and forecast like-for-like sales growth of 3% to 5% this year.

On the data front, the German Ifo survey's business climate index came in at 105.7 versus forecasts for 106.7 and a previous reading of 107.3.

The current assessment index rose to 112.9 from 112.5 the previous month, beating expectations for a reading of 112.0.

Finally, the expectations index printed at 98.8 compared with expectations for 101.6 and 102.3 in January.

Figures released earlier by Destatis confirmed that Germany’s gross domestic product rose 0.3% in the fourth quarter, in line with the third quarter, the initial estimate and consensus.

In calendar-adjusted terms, GDP grew 1.3% in the year compared with 1.7% in the third quarter, while unadjusted GDP grew 2.1% on the year. For 2015 as a whole, GDP increased 1.7%.

Still to come on the macroeconomic calendar in the US, S&P Case-Shiller house prices are at 1400 GMT, while consumer confidence and existing home sales are at 1500 GMT.