Europe open: Stocks waver as investors pause for breath

European stocks wavered in a tight range in early trade, as investors paused for breath following strong gains in the previous session.

At 0850 GMT, the benchmark Stoxx 600 index was down 0.2%, Germany’s DAX was flat and France’s CAC 40 was 0.1% lower.

Markus Huber, senior analyst at Peregrine & Black, said while sentiment has turned positive from neutral over the last couple of days, much of the rebound so far has been caused by bargain hunting rather than any actual fundamental change as far as the outlook for global growth and corporate profits is concerned.

“Although being overbought in the short-term, momentum still seems to be strong with traders preferring to buy dips for now,” he said.

Oil prices were in the black, staying positive following a surge in the previous session after Iran unexpectedly backed Saudi Arabia and Russia’s plan to freeze production at January levels. Still, Iran did not offer to take any action itself.

West Texas Intermediate was up 2.5% at $31.41 a barrel and Brent crude was 1% firmer at $34.83.

On the corporate front, British Gas owner Centrica rallied after its full year earnings beat analysts’ expectations.

BAE Systems was also on the front foot as its 2015 results met expectations and the aerospace and defence group issued guidance that underlying earnings per share will rise 5% to 10% in 2016.

Air France-KLM flew higher after saying it swung to a profit in 2015, while hotels group Accor gained after posting a profit increase of nearly 11% for 2015.

On the downside, Nestle slumped after reporting a 37% decline in net profit for 2015.

Still to come on the data front, US initial jobless claims and the Philadelphia Fed survey are at 1330 GMT, while leading indicators are at 1500 GMT.

Investors will also be awaiting the release of the European Central Bank’s January minutes.

“Today’s minutes will potentially show more nuance on how well anchored the promises of more actions were (Draghi said that the Governing Council had been unanimous on communication),” said Societe Generale.

“Moreover, we are looking for further details on the reasoning around the downside risks to core inflation (there is some room to lower the core inflation forecast in our view).”