Investing.com – European stocks traded lower on Tuesday, as investors looked ahead to the U.K. Prime Minister Theresa May’s speech on plans for negotiations for leaving the European Union (EU), known as Brexit.
Nearing midday in Europe, the benchmark Euro Stoxx 50 lost 0.70%, France’s CAC 40 fell 0.61%, and Germany’s DAX 30 traded down 0.83%.
Investors fear that May will outline plans for the U.K. to leave the single market and the customs union in order to prioritize immigration controls and bilateral trade deals in a so-called "hard Brexit".
The prime minister has indicated that she intends to trigger in March the formal process to withdraw from the EU, but has yet to spell out details of the governments negotiating strategy.
Advance briefings of the speech, released by May’s office, said Britain will not seek a Brexit deal that leaves it "half in, half out" of the EU.
May was scheduled to speak at 6:45AM ET (11:45GMT).
On the company front, British firms were also grabbing headlines. British American Tobacco (LON:BATS) agreed to a $49.4 billion takeover of its American rival Reynolds American (NYSE:RAI).
Shares in Rio Tinto (LON:RIO) fell more than 1% after the global miner reiterated its guidance to produce 330 to 340 million tons of iron ore.
On the upside, Rolls Royce (LON:RR) jumped nearly 6% after the aero-engine maker settled a long-running bribery probe and said that 2016 profit would beat expectations.
Back on the continent, Mediaset (MI:MS) saw its shares slump nearly 4% on Italian media reports that its acquisition by French rival Vivendi (PA:VIV) might not receive regulatory approval.
On the economic front, German economic sentiment improved less than expected in January, as did the optimism in the wider euro zone, according to a report published Tuesday by the ZEW Centre for Economic Research.
In London, the U.K. saw annual inflation rise more than expected, hitting its highest point since mid-2004.
Meanwhile, oil prices jumped more than 1% on Tuesday, buoyed by the continuing flow of comments surrounding the deal to reduce global production.
Saudi Arabian Energy Minister Khalid al-Falih said on Monday that the kingdom will adhere strictly to its commitment to cut output under a global agreement, expressing confidence that OPEC's plan to prop up prices would work.
Speaking to reporters on the sidelines of an industry event in Abu Dhabi, Falih added that OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, citing the level of compliance with the deal and the rebalancing of the market.
On Tuesday, United Arab Emirates energy minister Suhail Mazroui reportedly said it was too early to say if major oil producers would need to renew the deal to curb output when it ends in roughly six months, but indicated he saw a drop in global inventory levels.
Energy stocks were trading mixed, as French oil and gas major Total SA (PA:TOTF) slipped 0.07% , Italy’s ENI (MI:ENI) gained 1.04%, while Norwegian rival Statoil (OL:STL) traded down 0.25%.
Financial stocks also showed mixed signs, as French lenders BNP Paribas (PA:BNPP) lost 0.16% and Societe Generale (PA:SOGN) fell 0.43%, while Germany’s Deutsche Bank (DE:DBKGn) was unchanged as Commerzbank (DE:CBKG) gained 0.25%.
Among peripheral lenders, Italy’s Intesa Sanpaolo (MI:ISP) was off 0.08% but rival Unicredit (MI:CRDI) jumped 2.14%, while Spanish banks BBVA (MC:BBVA) lost 0.15% and Banco Santander (MC:SAN) traded up 0.20%.
In London, the commodity-heavy FTSE 100 fell 0.27% with the basic resources sector under pressure
Shares in Glencore (LON:GLEN) sank 1.69%, Anglo American (LON:AAL) dropped 1.73%, while BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) slumped 2.23% and 1.25%, respectively.
Energy stocks were slightly lower, as BP (LON:BP) lost 0.12% and rival Royal Dutch Shell (LON:RDSa) fell 0.24%.
Financial stocks were broadly higher as shares in HSBC Holdings (LON:HSBA) gained 0.28% and the Royal Bank of Scotland (LON:RBS) traded up 1.72%, while Barclays (LON:BARC) and Lloyds Banking (LON:LLOY) rose 0.41% and 0.11%, respectively.
In the U.S., Wall Street pointed a lower open as traders returned to their desks after the Martin Luther King holiday. The Dow Jones Industrial Average futures fell 0.40%, S&P 500 futures dropped 0.50%, while the Nasdaq 100 futures lost 0.46%.