Europe open: Shares lower as US debt ceiling drama continues

European markets opened lower Wednesday as the US debt ceiling negotiations continued to weigh on sentiment.

The pan-European Stoxx 600 index was down 0.25% in early deals.

US futures were slightly higher as investors awaited news of developments in the negotiations between congressional leaders and President Joe Biden on the debt ceiling. Quad leaders cancelled a planned meeting in Sydney next week as Biden cut his Asia trip short to return to Washington for more talks.

Oil prices fell again after a surprise rise in US crude inventories stoked demand concerns on the heels of weaker-than-expected economic data from the America and China.

Brent crude futures slipped 0.7%, to $74.42 a barrel, while West Texas Intermediate crude was down 0.8%to $70.84.

“US recession worries are back to being front and centre after Americans showed signs of becoming more edgy about spending. The weaker oil price is reflecting nervousness about what’s ahead for the US and, as a knock-on effect, prospects for the world economy,” said Susannah Streeter at Hargreaves Lansdown.

“Investors are staying cautious as talks aimed at averting a US default continue, with US Treasury Secretary warning that deep cracks in the financial system would appear if budget agreement is not reached. However, there is a small sliver of more optimism with the Republican Speaker of the House of Representatives, Kevin McCarthy, saying that progress can be made by the end of the week.”

Shares in Commerzbank fell 5% in early trading after the German bank posted better-than-expected first-quarter results, with net profit having nearly doubled.

Siemens raised its full-year sales and profit expectations after posting better-than-expected sales in the second quarter.

Credit-checking firm Experian was lower after a 19% drop in full-year pre-tax profit.

London Stock Exchange Group fell after a consortium including Blackstone and Thomson Reuters sold 33m shares in the company in a placing.

British Land slumped after it said the value of its portfolio declined by 12.3% in the year to the end of March as higher interest rates had an impact on property yields.

Reporting by Frank Prenesti for Sharecast.com