Europe open: Soft start for stocks amid Covid-19 concerns in China, weak German surveys

Stocks in Europe began the day on a weak note amid continued market chatter around new Covid-19 cases in China and after the release of a softer-than-expected reading for economic confidence in Germany.

"Things sure are looking messy out there right now, especially in Forex Land where the Euro is within a hair's breadth of trading at parity with the US Dollar this morning," said Jeffrey Halley, senior market analyst at Oanda.

As of 0942 BST, the pan-European Stoxx 600 was dipping 0.26% to 413.96, alongside a 0.55% decline on the German Dax to 12,760.91 while Spain's Ibex 35 was drifting lower by 0.33% to 8,038.6.

Euro/dollar was last declining 0.28% to 1.0012, having earlier slipped to 1.0002. Meanwhile, longer-term euro area government bond yields were extending their recent drift lower.

In parallel, front-dated Brent was down by 1.92% to $105.18 a barrel on the ICE.

Halley also noted news that the Chinese city of Wugang was being locked down for three days amid reports of small increases in case numbers in other areas of the country.

"That is weighing heavily on China's equities right now with Mainlanders rightly worried that more lockdowns, especially in Shanghai or Beijing, could occur," he said.

Meanwhile, the ZEW Institute's gauge of economists' and analysts' expectations for the German economy fell to a reading of -53.8 in July, versus -28.0 in June (consensus: -41.0).

As one might reasonably have expected, experts cited risks to energy supplies, upcoming ECB rate hikes and the potential impact of Covid-19 restrictions in China as their major concerns.