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European stocks trim losses as sentiment remains cautious; Lanxess down 17%

Jenni Reid
Holly Ellyatt

This is CNBC's live blog covering European markets.

European stock markets dipped at Tuesday's open before trimming losses as investors remained cautious.

The Stoxx 600 index was 0.09% lower at 9 a.m. London time, with most sectors negative. Autos led losses, down 0.8%, and tech stocks were down 0.6%. Defensive sectors utilities and healthcare rose 0.7% and 0.4%, respectively.

European markets


Markets fell at the start of the new trading week amid jitters over the economic outlook. The benchmark Stoxx 600 index closed 1% lower Monday, with almost all sectors in negative territory.

Investors will be monitoring the U.K. this week, with inflation data due Wednesday and a monetary policy announcement Thursday. A 25 basis point hike is widely expected, after the European Central Bank hiked and the Federal Reserve paused last week.

Sunil Krishnan, head of multi-asset funds at Aviva Investors, said people are underestimating the current rally in European stocks, which came off a low more than eight months ago.

"In that time, I think investors have really struggled to build any love for the rally. The concerns have moved seamlessly from one thing to the next, firstly it was about rates moving too quickly, then we moved on to the banking crisis and a potential credit crunch, and then back to interest rates," Krishnan told CNBC's "Squawk Box Europe."

That's despite first-quarter earnings showing resilient company margins and potential for profit growth, he said.

Rather than further nudges higher in interest rates, he added, "what Is going to change that, and this is where the bond market has moved to, is at what stage do we see a meaningful drop off in growth? And I think if that's postponed for equities, the rally continues."

Asia-Pacific markets traded lower as investors digested China's central bank decision to cut its one-year and five-year loan prime rate.

U.S. markets were closed for the Juneteenth holiday on Monday, but stock futures ticked lower overnight as investors looked ahead to a shortened week of trading.

Stocks on the move: Lanxess down 17%

German chemicals company Lanxess fell 17% in morning trade, pulling down the blue chip DAX index, after it issued profit warnings for the second quarter and full year.

The Cologne-based company hit an almost 14-year low after it said it was experiencing "very weak" demand and an ongoing hit from customers reducing stock.

"The demand recovery we originally expected in the second half is not yet visible – neither in China nor in other meaningful end markets," CEO Matthias Zachert said in a statement.

"This impacts us especially in Germany: Here we are massively impacted by the disadvantageous conditions such as the high energy prices and massive bureaucracy. In times of weak demand Germany as an industrial location is just not competitive."

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Lanxess share price.

— Jenni Reid

Europe stocks open lower

European stock markets fell in early trade, with the Stoxx 600 index down 0.4%.

Germany's DAX declined 0.53%, with France's CAC 40 down 0.2% and the U.K.'s FTSE 100 0.14% lower.

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Stoxx 600 index.

— Jenni Reid

UK economic strength remains a problem for Bank of England, strategist says

UK economic strength remains a problem for Bank of England, strategist says
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Street Signs Europe

Niall O'Sullivan, chief investment of multi-asset strategies EMEA at Neuberger Berman, discusses the upcoming Bank of England rate decision and the housing market, among other things.

China cuts loan prime rates by 10 basis points

China has cut its key one-year and five-year loan prime rates by 10 basis points each, the first cut since August.

The one-year LPR stands at 3.55%, down from 3.65%, while the five-year LPR was reduced to 4.20% from 4.30%. The moves mirror cuts that China made last week to its short-term and medium-term loan rates.

After the announcement, the offshore yuan weakened 0.13% to trade at 7.172 against the greenback.

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European markets: Here are the opening calls

European markets are heading for a flat open Tuesday.

The U.K.'s FTSE 100 index is expected to open 5 points lower at 7,580, Germany's DAX 3 points lower at 16,190, France's CAC 3 points lower at 7,301 and Italy's FTSE MIB 37 points lower at 27,835 according to data from IG.

Data releases include euro zone current account figures for April.

— Holly Ellyatt