Europe open: Stocks edge lower; Danone drops on sales growth warning

European stocks edged lower in early trade as volumes began to taper off in the run-up to Christmas, with Danone under the cosh after a warning over its 2016 sales growth.

At 0845 GMT, the benchmark Stoxx Europe 600 index was down 0.3%, Germany’s DAX was off 0.1% and France’s CAC 40 was 0.4%, weaker.

Meanwhile, oil prices advanced, with West Texas Intermediate up 0.8% at $52.33 a barrel and Brent crude up 0.7% to $55.60.

Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, said; “European equities are trading slightly lower in early trade, with oil stocks higher and banks and mining stocks under pressure.

“As we run up to Christmas, with little corporate news, the expectation is that markets will remain relatively quiet - however, Donald Trump may provide some volatility for investors in the shape of a diplomatic spat with China. While no one expects the USA and China to be best friends, moving away from the current status quo into a frosty relationship could provide an unwelcome backdrop for markets.”

The Stoxx 600 basic resources index fell 1.5%, while the corresponding sub-index for banks was down 0.7%.

Investors were digesting news that China has agreed to return a US underwater drone that was taken by a Chinese naval vessel in the South China Sea last Thursday, which helped to assuage concerns about diplomatic tensions between the two countries.

In corporate news, Danone lost ground after the French food company said sales growth for 2016 will be slightly below its target due to weakness in the fresh dairy business in the fourth quarter.

Elsewhere, oil giant BP edged higher after signing an agreement to take a 10% stake in Abu Dhabi's ADCO onshore oil concession for an undisclosed sum. BP also said on Monday that it will invest nearly $1bn in a natural gas field off the coast of West Africa as it struck a deal with Kosmos Energy.

Carnival shares slumped as Berenberg downgraded its stance on the stock to ‘hold’ from ‘buy’ and cut the price target to 4,000p from 4,200p.

Still to come, investors will eye the release of the German Ifo survey at 0900 GMT.