Europe open: Stocks waver as investors pause for breath

European stocks wavered in early trade as investors paused for breath following solid gains in the previous session, with the UK in focus again as Theresa May takes over from David Cameron as Prime Minister.

At 0900 BST, the benchmark Stoxx Europe 600 index was flat, Germany’s DAX was 0.3% lower and France’s CAC 40 was down 0.1%.

At the same time, oil prices retreated after a stellar performance on Tuesday. West Texas Intermediate was down 1.2% at $46.22 a barrel and Brent crude was 1.4% weaker at $47.77. Data from the American Petroleum Institute on Tuesday also weighed on prices, after it showed US crude inventories rose by 2.2m barrels in the week to July 8 to 523.1m, versus analysts' expectations for a 3m barrel drop.

“European equities are range bound in early trade, as markets have reached the point where investors are starting to wonder how much further the rally can go from here and what impact strengthening sterling will have on asset prices,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“The last few weeks have seen markets rally strongly as investors assume the most positive outcome for assets, with limited Brexit risks combining with the investor assumption that global central banks will do whatever it takes to ease market concerns and stimulate the market - including the view that the Fed will not hike rates any time soon. In effect, this has created a situation where the global equity market has been operating on the premise that they can have their cake and eat it too!”

Pharmaceuticals giant AstraZeneca was trading a little higher after saying it has entered into an agreement with Sandoz and its affiliates to resolve litigation relating to Faslodex (fulvestrant).

Luxury retailer Burberry was in the black despite reporting declines across all three its regions, which led to a 3% like-for-like drop in retail sales in the first quarter.

Alstom was higher after the French train maker posted a 9% rise in quarterly sales, while UniCredit shares gained ground after the bank sold minority stakes in two of its units.

Poundland surged after it agreed South Africa’s Steinhoff Holdings could buy the remaining shares in the London-listed discount retailer it does not already own for 222p per share in cash, valuing it at £597m.

French supermarket operator Groupe Casino was on the back foot after saying second-quarter sales were up 3.8% on a like-for-like basis.