Europe open: Stocks slip lower ahead of Draghi speech

Stocks are drifting lower as investors wait on a speech from European Central Bank president Mario Draghi and mull the first drop in Chinese factory gate inflation since June 2016 amid a somewhat uneasy calm in financial markets despite record-low levels of volatility.

Against that backdrop, news that the US president fired the director of the Federal Bureau of Investigation highlights ongoing headline (when not full-blown political) risk in the US.

As of 1004 BST the Stoxx 600 was drifting lower by 0.21% to 395.02, as the Dax slipped 0.08% to 12,739.32 and the FTSE Mibtel gave back 0.48% to 21,385.53.

"While low volatility is not necessarily a bad thing, it makes for a more certain investment environment, the fact that investors appear so relaxed should on the face of it be a warning sign. Furthermore given that markets have a tendency to revert to their long term mean and we currently sit at the extremes of these historical norms, this would suggest that this period of calm is unlikely to last," said Michael Hewson, chief market analyst at CMC Markets UK.

ECB chief Draghi was due to speak to the Dutch parliament towards 1100 BST amid intensifying calls for a debate around the need for reforms of the euro area's architecture, especially following the election of French centrist reformer Emmanuele Macron as president.

"Mario Draghi will give a speech before the Dutch parliament. After the French presidential election, Draghi might use today’s opportunity to cautiously prepare market participants for [a change in wording in the Governing Council's balance-of-risks assessment], which is likely to be formalized at the GC meeting in June. In our view, this would cause some pressure to build in the EGB market," said analysts at UniCredit Research.

Meanwhile, on the other side of the globe, data released overnight showed Chinese factory gate prices slipped from a 7.6% year-on-year pace in March to 6.4% in April.

That, Julian Evans-Pritchard at Capital Economics said, meant hopes for "sustained reflation" in the world's third largest economy are fading.

Against that backdrop, euro/dollar was off by 0.06% to 1.0872 while front month Brent crude futures were up by 0.77% to $49.11 a barrel on the ICE.

French factories whirred back into life in March, with total output ahead by 2.5% on the month, while total industrial production was ahead by 2.0% (consensus: 1.0%).

Industrial production in Italy outpaced economists' forecasts, rising by 2.8% year-on-year in March (consensus: 2.5%).

First quarter operating profits at HeidelbergCement slipped 3% on a like-for-like basis, dragged down by a decline in emerging markets.

Sales volumes over that same period at France's EdF fell 1.5% hurt by the weaker pound, the energy giant disclosed.

Net income at French lender Natixis jumped 40% during the first quarter amid a flood of trading activity.