Europe open: Stocks edge lower as oil prices drop

European stocks edged lower in early trade following mixed sessions in the US and Asia, as oil prices lost ground.

At 0900 BST, the benchmark Stoxx Europe 600 index was down 0.3%, Germany’s DAX was off 0.1% and France’s CAC 40 was 0.5% weaker.

At the same time, oil prices retreated after oil workers in Kuwait agreed to end their three-day strike, returning output to normal levels.

West Texas Intermediate was down 2.8% to $39.95 a barrel while Brent crude was off 2.3% to $43.02.

The Stoxx 600 oil and gas index slipped 0.8%.

“One of the biggest stories for today's trading session, which is going to impact on the energy sector, is the end of a labour strike in Kuwait. The country has already inflated its production to 1.5 million b/d and now it will be able to bring back its production output to 2.8 million b/d. This could punish the crude price further,” said Naeem Aslam, chief market analyst at AvaTrade.

“Given the mammoth rivalry between Saudi Arabia and Iran, the glut of supply will be even higher and this could easily push the price of oil towards the $35 mark if the production war continues. Crude oil inventory data is due later in the day and if we do not see a big drawdown in the inventory numbers, the selloff could become intense.”

In corporate news, chip designer ARM Holdings rallied after its first-quarter results beat analysts’ expectations.

BHP Billiton shares were higher after it cut its iron ore production guidance and said it was on track to deliver an average unit cost improvement of 14% across its major assets.

Heineken was also in the black after the brewer said beer volumes in the first quarter rose sharply, partly due to a strong performance in Vietnam and China.

On the macroeconomic front, data released by Destatis earlier shower German producer prices were flat on the month in March versus expectations for a 0.2% increase.

Compared with the same month last year, prices were down 3.1, which was steeper than the 2.9% drop pencilled in by economists.

Energy prices were a big contributor, down 9.2% compared with March last year, with prices of intermediate goods down 2.3% and price of non-durable goods 0.3% lower.

There are no major Eurozone data due on Wednesday but investors will eye a speech by European Central Bank chief Mario Draghi in Frankfurt at 1100 BST.