Europe open: Stocks edge lower; German Ifo in focus

European stocks edged lower in early trade at the start of a week that will see rate announcements from the Federal Reserve and the Bank of Japan, with a focus on key German data later on Monday.

At 0845 BST, the benchmark Stoxx Europe 600 was down 0.5%, Germany’s DAX was 0.7% weaker and France’s CAC 40 was 0.6% lower.

At the same time, oil prices slipped back a touch as investors booked some profits following recent gains. West Texas Intermediate was down 0.8% to $43.37 a barrel and Brent crude was 0.7% lower at $44.81.

“European markets have opened slightly softer at the start of a week which includes central bank decisions and significant corporate earnings. With the market pricing in no chance of a US rate rise this week, investors will instead be focusing on the Federal Reserve's underlying tone and sentiment as to the future trajectory of rates, in particular the possibility of a hike in June,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

“After last week's comments on the potential for extending negative rate loans to the country's banks, the Bank of Japan meeting this week could also provide a catalyst for markets. With first quarter earnings still heavily in the spotlight, there is plenty to drive sentiment in either direction this week."

The FOMC announcement is on Wednesday, while the BoJ will announce its latest policy on Thursday.

On the corporate front, shares in France’s EDF were sharply lower after it said late on Monday that a capital increase had been approved. On Monday, chief executive Jean-Bernard Levy told a French radio station the company would have to press ahead with the nuclear-reactor project at Hinkley Point if it wants to continue to have nuclear power in France.

Philips shares were also under the cosh after the company said its first-quarter profits took a hit from tax charges on the back of its separation of the lighting business.

Still to come on the data front, investors will eye the release of the German Ifo business climate survey at 0900 BST amid expectations the reading could be higher than the previous month as the economic outlook in China improves and US interest rates continue to be on hold.

US new home sales at 1500 BST will also be eyed.