Europe midday: Forvia slumps on job cuts plan; Barclays rallies
European stocks opened lower on Tuesday as investors fretted about the timing of interest rate cuts, while French car parts supplier Forvia fell after announcing large job cuts.
The pan-European Stoxx 600 index was down 0.12% at 491.78, with regional bourses mixed. Asia-Pacific markets fell overnight, while the US was closed for the Presidents Day holiday.
Data from the US last week unsettled investors who now fear that interest rates may stay elevated for longer as the Federal Reserve, or central bank, takes a more cautious view on the downward path of inflation.
China’s central bank cut the benchmark five-year loan prime rate for the first time since June but left the one-year rate - used for most personal and corporate borrowing - unchanged.
The People’s Bank of China cut the five-year loan prime rate, used for mortgages, by 25 basis points, to 3.95%, more than the 15 basis points expected.
‘’The fragility of China’s economy is weighing on minds as the country remains mired in a real estate slump with the latest attempt to stimulate demand highlighting the depths of the problems," said Hargreaves Lansdown analyst Susannah Streeter.
"The sharper than expected cut hasn’t done the trick of shoring up confidence yet. It’s concentrated minds on the collision of concerns about the economy, from real estate debts to deflation to falling foreign investment. Iron ore prices are trading around three-month lows, as hopes that demand for steel could rebound have ebbed away."
In equity news, Forvia fell sharply as the company said it would cut around 13% of its European workforce over the next five years to compete with Asian rivals in the shift to electric cars.
UK bank Barclays was in focus after announced in first major overhaul in 10 years. Shares were up after the lender announced a major operational overhaul including massive shareholder payouts, substantial cost cuts, asset sales and a reorganisation of its business divisions as annual profits fell.
Air Liquide was up as the French industrial gases company reported better than expected full-year operating profit and saying it had already reached its margin targets planned for 2025.
Anglo American shares fell after its Amplats unit said it may have to axe more than 4,000 jobs in response to falling platinum group metals prices. The sector was also hit by poor results at Australian giant BHP which had to write off $2.5bn from its Australian nickel operations due to a collapse in the metal's price.
InterContinental Hotels was also higher after full-year results and plans to return $1bn to shareholders via a buyback and dividends.
Reporting by Frank Prenesti for Sharecast.com