Europe open: Stocks slip as oil prices retreat; China data digested

European stocks edged lower in early trade following a mostly downbeat session in Asia and amid weaker oil prices.

At 0850 BST, the benchmark Stoxx Europe 600 index was down 0.6%, Germany’s DAX was 0.8% weaker and France’s CAC 40 was off 0.7%.

At the same time, oil prices slipped as hopes of an agreement to cap production at the OPEC meeting on 17 April faded.

West Texas Intermediate was down 0.5% to $39.53 a barrel and Brent crude was 0.6% lower at $41.70.

“European markets have opened the week in negative territory, as investors look to the start of the US earnings season to provide a potential catalyst for market direction. Earnings expectations have been cut significantly over the past quarter, in particular in the US where the combination of a strong dollar and weak commodity prices has impacted negatively upon prospects for corporate profitability,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“Although there has been a small rebound in oil and metal prices, with the S&P close to recent highs and implied volatility at very low levels, the concern is that the market is being lulled into a false sense of security. If the earnings season turns out to be a dramatic one, there is significant potential for aggressive stock and sector moves in the weeks ahead.”

Data out of China earlier showed inflation remained benign. The consumer price index rose 2.3% on the year in March versus expectations of a 2.5% increase and in line with the previous month’s 2.3%.

The consumer price index fell 0.4% in March from February.

“For an extended period, data from Beijing has repeatedly followed a negative path and this could be the continuing theme as the nation continues to transition away from its manufacturing roots towards the service sector. Despite the mounting concerns over China’s pace of growth, the Shanghai Composite Index received a welcome boost trading +1.65% higher as expectations heightened over further monetary easing by the People’s Bank of China (PBoC) in an effort to attain stability,” said Lukman Otunuga, research analyst at FXTM.

Also on Monday, the World Bank downgraded its GDP forecast for China to 6.3% growth in 2016, down from a 6.4% estimate in October and to 6.2% for next year versus 6.3% previously.

In corporate news, German software company SAP was in the red after cautioning that first-quarter results would be weaker than expected.

In London, Daily Mail & General Trust nudged higher after the Daily Mail parent confirmed it was in talks with private equity firms about a possible bid for Yahoo’s assets.

Asset manager Schroders was in the black after Jefferies upgraded the stock to ‘buy’ from ‘hold’.