Europe open: Stocks slip low as traders continue to buy protection

European stocks have started the day on a down note as investors sit up and take increasing notice of political developments in Washington.

At 0928 BST the Stoxx 600 is down by 0.62% to 388.73, alongside a drop of 0.40% for Germany's Dax to 12,579.69 and a retreat of 1.34% in the FTSE Mibtel to 20,998.78.

The euro on the other hand was on the backfoot, giving back a little of the previous day's advance. A widely-followed gauge of volatility in equities on the other hand was continuing to move higher as investors bought protection against downside risks.

That saw the VStoxx index of volatility for the Eurostoxx 50 put on 8.38% to 17.50.

Wall Street endured steep losses the day before as events on Capitol Hill took many investors by surprise.

"The big question now is whether this turns out to be the start along a road to an impeachment process or whether this is another bump in the road.

"Depending on how events play out over the next few days that planned rate rise for the US Federal Reserve, which is due next month, might well have to be put firmly on the back burner. It is hard to envisage a scenario where the Fed would even consider raising rates at a time when there is so much political uncertainty," said Michael Hewson, chief market analyst at CMC Markets UK.

Oren Klachkin at Oxford Economics was of a broadly similar view, telling clients that: "increased congressional attention on the administration's interactions with Russia and the FBI puts Congress' fiscal stimulus agenda at risk. In the near-term, this will lead to some market repricing of the expected Trump "bump" to the US economy. However, the greater risk for markets and the economy is that this leads to an impeachment process."

Unemployment in France was steady at 9.6% during the first quarter of 2017 on an ILO basis, according to INSEE.

Still on the economic calendar for later on Thursday, were initial weekly US unemployment claims figures due out at 1330 BST, alongside the Philly Fed's manufacturing sector gauge for May and the Conference Board's index of leading economic indicators for the month of April at 1500 BST.

Drug-maker Merck was on the backfoot even after reporting a 14.5% jump in core earnings for the first three months of the year.

Spain's incumbent telecoms operator Telefonica was lower despite analysts at Goldman Sachs having raised their target price on the shares of €11.6, up from €9.90 previously.