Europe open: Stocks edge lower as investors book profits after recent gains

European stocks edged lower in early trade, with investors booking a few profits following recent gains as the focus shifts to this week’s European Central Bank meeting.

At 0910 GMT, the benchmark Stoxx Europe 600 index was down 0.5%, Germany’s DAX was down 0.9% and France’s CAC 40 was off 0.5%.

Meanwhile, oil prices were in the black. West Texas Intermediate was up 1.7% to $36.52 a barrel while Brent crude was 1.4% higher at $39.26.

“European markets have opened the week slightly lower, pausing for breath after the 10% gains seen over the last three weeks. Investors, whose profit and loss may have looked awful a month ago, now have a difficult decision to make in determining whether this is a good exit point, or if global stock markets will continue to trend higher,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“China's National People's Congress has confirmed the government's priority of sustaining growth in the face of painful structural change. However, with little new information released so far this week there has been nothing said that might push markets higher. This is reflected in weaker industrial metal prices this morning, although oil continues to recover from its recent lows.”

Over the weekend, China outlined plans for an expansion of between 6.5% to 7% for this year, down from last year’s target of around 7% and weaker than last year’s 6.9% rate.

On the corporate front, shares in EDF tumbled after the French energy company confirmed that chief financial officer Thomas Piquemal has quit. Although the group did not give a reason for his exit, press reports over the weekend suggested he was leaving due to concerns over the Hinkley Point nuclear plant.

In London, Old Mutual surged after the insurer said it was considering all the options available under its strategic review amid media reports it is planning a multi-billion pound break-up.

Monday’s economic calendar is pretty light, with no major Eurozone data releases due. This week, the focus will be on the ECB’s rate announcement and ensuing press conference on Thursday.

Deutsche Bank said expectations are once again running high ahead of the meeting but some caution is warranted.

It said the market was pricing in a 13 basis points facility cut, a six-month extension of quantitative easing and a €10bn increase in the pace of QE.

Deutsche Bank said: “The ECB could in addition announce some term liquidity easing measures such as an extension of the existing TLTROs and/or further TLROs. These term liquidity measures could ease some of the pressures on the European banking system but are unlikely to be hugely significant as the refinancing pressures on the European banking system are not particularly elevated at present and banks need to maintain market access and issue ‘bail-in able’ debt from a regulatory perspective.”