Europe open: Stocks slip as Brexit woes continue to weigh

European stocks were in the red in early trade as investors tried to gauge the impact of the UK’s decision to leave the European Union, although losses were significantly less pronounced than they had been on Friday.

At 0855 BST, the benchmark Stoxx Europe 600 index was down 0.9%, Germany’s DAX was 0.2% lower and France’s CAC 40 was off 0.3%.

In Spain, the IBEX 35 was up 3.1% after acting Prime Minister Mariano Rajoy won the most votes in the country’s repeat national elections on Sunday, although the People’s Party fell short of a majority.

Meanwhile, the pound continued to lose ground against the dollar, trading at $1.3400 compared with $1.3676 late on Friday in New York. Ana Thaker, market economist at PhillipCapitalUK, said sterling remains subject to any guidance from the government as to what the next stages may be, with strong downside risk.

“The sheer extent of the uncertainty as to what Brexit really means for the UK economy and future company profits, combined with seismic changes in the political landscape is making it very difficult for investors to establish accurate fair-value levels for stocks, bonds and currencies,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

“The Spanish elections have provided some good news for European leaders as the fallout from the UK's referendum decision saw the Spanish election's equivalent flight to safety in increasing the number of seats for the conservative People's Party. However, the failure to reach an overall majority means an extension of the deadlock and challenges ahead to secure a working government.”

George Osborne said on Monday that the UK was ready to face the future “from a position of strength”, adding that there would be no immediate emergency Budget.

Looking to calm financial markets in his first public address since the referendum results, the Chancellor said in a statement: “Growth has been robust and employment is at a record high. Our economy is now about as strong as it could be to confront the challenge the country now faces."

After the result of the EU referendum, the Bank of England said it stood ready to provide £250bn of additional funds to support the UK’s banks.

In corporate news, budget airline EasyJet tanked after warning that Britain’s vote to the leave the European Union will dent sales in the second half of the year and reduce third-quarter pre-tax profit by around £28m.

Swedish truck maker Volvo was also sharply lower after it said it increased its provision for a possible European Commission fine by more than 60%.

The stoxx 600 banks index was down 1.7%, well off the lows hit on Friday, while London-listed banks were firmly under the cosh but also not as weak as they were at the end of last week.

RBS was 10% lower, Barclays was down 8% and Lloyds Banking Group slid 6.3%.

Oil prices steadied, with West Texas Intermediate up 0.4% at $47.82 a barrel and Brent crude 0.7% firmer at $48.74.