Europe open: Stocks in the red as oil slips below $30 a barrel

European stocks fell in early trade, taking their cue from weak sessions in the US and Asia, as oil prices slipped below $30 a barrel.

At 0840 GMT, the benchmark Stoxx Europe 600 index and France’s CAC 40 were both down 2%, while Germany’s DAX was 1.7% lower.

Equity markets in Asia took a beating, with China’s Shanghai Composite ending down a whopping 6.4%, while Japan’s Nikkei slid 2.4% and Hong Kong’s Hang Seng fell 2.3%.

“European equities are trading sharply lower this morning as the recent rally seen in oil has proved rather short-lived causing a late sell-off on Wall Street and hitting markets across Asia hard,” said Markus Huber, senior analyst at Peregrine & Black.

“There is massive doubt that any ECB action will be able not only to boost growth but also fight disinflation with both a slowing economy in China and lower oil prices likely to lead inflation even lower.

“Overall sentiment remains negative however it needs to be seen if the latest sell-off is indeed the onset of another major leg lower or just profit-taking in light of last week's impressive gains.”

West Texas Intermediate was down 2.7% at $29.51 while Brent crude was 2.7% weaker at $29.67. This weighed on the energy sector, pushing the Stoxx 600 oil and gas index down 3%.

In corporate news, EasyJet shares were in the red after the budget airline said the Sharm el-Sheikh disaster and the Paris attacks hit its revenue for the three months to 31 December.

Dixons Carphone was on the back foot after the electronics retailer lifted its annual profit guidance after a strong Christmas and announced plans to close 134 UK stores.

Siemens bucked the trend, racking up solid gains after the industrial group’s first quarter earnings late on Monday beat expectations and the company lifted full year profit guidance.

There are no major Eurozone releases due, so attention will turn to the US, where S&P/Case Shiller house prices are at 1400 GMT, Markit Services PMI is at 1445 GMT and consumer confidence is at 1500 GMT.

Meanwhile, investors will also be looking ahead to Wednesday’s Federal Open Market Committee rate decision.

“It is premature for the Fed to rule out another hike in March, so risk markets are unlikely to get a major relief,” said Societe Generale.

The bank’s economists expect a mixed message.

“The post-meeting statement is set to acknowledge the recent activity slowdown and tighter financial conditions, making it more dovish than the December communiqué. However, the FOMC’s outlook for the labour market and inflation is unlikely to change materially, and the statement is likely to characterise the risks as balanced.”