Europe open: Stocks in the red as oil slides and Ifo disappoints

European stocks edged lower in early trade as oil prices slid again and following softer-than-expected data on German business sentiment.

At 0905 GMT, the benchmark Stoxx Europe 600 index was down 0.7%, France’s CAC 40 was off 0.5% and Germany’s DAX was down 0.3%.

“Markets have started the week tentatively, with European equities following oil prices lower, giving up some of the gains seen late last week. The correlation between oil and equities remains a key driver for markets as investors expect lower oil prices to force sovereign wealth funds to divest rather than invest,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

Markets rallied at the end of last week after European Central Bank chief Mario Draghi hinted that further stimulus was on the cards. As a result, investors will be paying close attention to the Federal Reserve rate decision on Wednesday, as well as the Bank of Japan’s monetary policy statement on Friday.

Energy shares were among the worst performers, with the Stoxx 600 oil and gas index down 1.8% as West Texas Intermediate fell 2.4% to $31.42 a barrel and Brent crude dropped 2.7% to $31.30.

In corporate news, 3i was a high riser in London following upbeat research notes from Societe Generale and Barclays.

B&Q owner Kingfisher was in the red after announcing a five-year transformation plan aiming to deliver a £500m sustainable annual profit uplift by the end of the programme.

Siemens was little changed following a media report the industrial group has agreed to buy privately-held US engineering software firm CD-adapco for close to $1bn in cash.

On the data front, the German Ifo survey for January came in weaker than expected.

The business climate index fell to 107.3 from 108.6 the previous month and below the 108.4 reading expected by economists.

Meanwhile, the current assessment and expectations indexes also undershot estimates, at 112.5 and 102.4, respectively. Economists had been expecting readings of 112.8 and 104.1.