Europe open: Shares lower as J&J Covid-19 vaccine pause sours mood

European shares opened lower on Tuesday on the back of weaker Wall Street futures and news that a Covid-19 vaccine trial in the US had been paused.

The pan-European Stoxx 600 index was down 0.33% with all major European bourses lower. Dow Jones futures were 149 points lower.

Johnson & Johnson announced overnight that it was pausing its Covid-19 vaccine trial after a participant reported an “unexplained illness”.

"Though a pause in a trial … isn’t exactly out of the ordinary, it still dealt a blow to the market’s faint, naïve hopes of a vaccine arriving this side of Christmas," said Spreadex analyst Connor Campbell.

The mood was also dampened by fading hopes of a US stimulus deal, with little appetite from politicians to get a deal done.

“Investors are also not too hopeful for another stimulus aid package from the US this week as it is pretty clear that House members are in no mood to have any sort of resolution,” said Avatrade chief analyst Naeem Aslam.

“In addition to this, Senate Republicans have also failed to warm up to the President’s stimulus proposal. Traders know that this is a bumpy road, but there were hopes that perhaps we may finally see politicians coming to their senses and finally forming a deal. “

US third quarter earnings from banks were set to be the focus on Tuesday with JP Morgan, Citigroup, and BlackRock are expected to report.

Investors were also eyeing Brexit developments with Thursday’s self-imposed UK deadline for a trade deal with the European Union.

On the economic front, official UK data showed the unemployment rate rose to a higher-than-expected 4.5% in the three months to August 31.

In company news, Airbus fell 3.5% as JPMorgan cuts its rating on the planemaker's stock to "underweight" from "neutral".

Shares in German pharma firm MorphoSYS topped the losers board, down 8.5% as the company announced a €325m bond offering.

Stocks exposed to the coronavirus pandemic and related restrictions felt the impact, with engine maker Rolls-Royce one of the worst performers following strong gains over the past week, closely followed by British Airways and Iberia parent IAG, Premier Inn owner Whitbread, GKN owner Melrose and InterContinental Hotels.

Cineworld, Upper Crust owner SSP, pub chain Mitchells & Butlers, cruise operator Carnival and travel company TUI also fell sharply.