Europe open: SAP lifts German stocks higher, but wider markets fall

European stocks edged lower on Tuesday on a quiet day for economic data, as investors continued to take profits with markets close to record highs.

Most major benchmarks across the continent were in the red, with the exception of Frankfurt's DAX, which gained 0.4% on the back of a big jump from tech giant SAP.

The Stoxx 600 was down 0.2% at 520.59, falling for the second straight day since hitting a four-week high of 524.99 on Friday – its highest level since reaching an all-time closing high of 528.08 on 27 September.

The negative start follows a weak finish on Asian markets overnight and a mixed close on Wall Street as US bond yields rose. Bonds were falling on the back of comments from several Federal Reserve policymakers who called for more gradual rate cuts, tempering expectations of more aggressive monetary easing over the coming months.

"Traders have also taken some profits after the recent market rally. The uncertainty surrounding conflicts in the Middle East and Europe, as well as the US presidential election, is weighing on market sentiment," said Patrick Munnelly, partner of market strategy at Tickmill Group.

In economic news, UK government borrowing figure for last month was the third-highest September figure since monthly records began in January 1993, according to data from the Office for National Statistics.

Borrowing came in at £16.6bn, up £2.1bn on the same month a year ago. The figure was higher than the Office for Budget Responsibility’s forecast of £15.1bn but below the consensus forecast of £17.4bn.

Also on Tuesday, investors will also be keeping a close eye on the International Monetary Fund and World Bank's annual meetings in Washington D.C, where the heads of the Bank of England and European Central Bank are due to speak.

While both are unlikely to reveal anything new, outlook statements regarding inflation and economic growth will be watched closely for indications about how monetary policy may pan out before the end of the year.

Market movers

Swedish aerospace and defence group Saab AB jumped after saying that full-year sales would hit the top end of guidance after third-quarter bookings surged 41%. Chief executive Micael Johansson said the company is seeing "increasing demand as European nations need to replenish their defense stocks".

SAP was also a high riser after the German software giant upped its full-year sales and profit targets after cloud revenue surged 27% in the third quarter. The company guided to an annual operating profit of €8bn, up €200m on previous guidance.

HSBC was trading flat after announcing the appointment of its new chief financial officer, as well as a number of key structural changes aimed at enhancing strategic execution and leadership. HSBC said it would streamline its operations by reorganising into four core business units – Hong Kong, UK, Corporate and Institutional Banking, and International Wealth and Premier Banking – designed to reduce duplication and improve agility.

Hotels group IHG declined after reporting a slowdown in RevPAR growth in its third quarter as conditions in China worsened. RevPAR was up just 1.5% in the three months to September, down from 3.2% in the second quarter, missing the 2.1% consensus estimate.