Europe open: Stocks little changed as luxury shares come under pressure

European stocks were little changed in early trade, struggling to make any real gains as investors continued to mull over central bank policy.

At 0900 BST, the benchmark Stoxx Europe 600 index was up 0.2%, Germany’s DAX was 0.1% firmer and France’s CAC 40 was flat.

At the same time, oil prices rebounded from heavy losses on Tuesday. West Texas Intermediate was up 0.8% to $45.27 a barrel while Brent crude was up 0.7% at $47.41.

Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, said: “Although European equities are trying to rally, markets remain tentative, with volatility increasing and investors worried about potential pitfalls ahead. With the market difficult to read, the fear is that bullish investors will get sucked in again, but this may be the start of a more pronounced downturn. The flip side is that with no alternative asset class proving attractive, investors may be forced back into equities as the least bad option, giving bearish investors nowhere to go.

“A normal equity market correction provides investors with the opportunity to invest in traditional safe havens such as bonds or precious metals. However, in this low interest rate environment, equities have become highly correlated with these other asset classes making it very difficult to find alternatives.”

In corporate news, Bayer nudged higher following reports it has upped its offer for Monsanto to about $129 a share from £127.50.

Telecommunications company Sky slipped after saying it has invested £1m in the Drone Racing League (DRL), which includes a distribution deal to show the league on the Sports Mix channel from October.

Construction group Galliford Try was in the black as it hoisted its dividend 21% after posting a record annual profit thanks to strong growth at its housebuilding and regeneration units.

Compass Group gained ground after JPMorgan Cazenove upgraded the stock to ‘overweight’ from ‘neutral’.

Luxury stocks were in focus on Wednesday, with Richemont in the red after the Cartier maker said operating profit in the first half was likely to drop by 45%. Meanwhile, Hermes was also under the cosh after saying it was abandoning annual sales growth forecasts from 2017 as a result of the uncertain trading environment.

FTSE 250 homeware retailer Dunelm was little changed after reporting a rise in full-year profit and revenue as it grew its market share despite increasing competition, and lifted its dividend.

On the data front, eurozone industrial production figures are due at 1000 BST.