Europe midday: Stocks on the back foot as investors remain cautious

European stocks were lower in choppy trade, with investors cautious amid ongoing concerns over global growth.

At midday, the benchmark Stoxx Europe 600 index was down 0.8%, Germany’s DAX was 0.6% lower and France’s CAC 40 was down 0.9%.

This followed on from a weak session in Asia, where Japan’s Nikkei 225 closed down 5.4%.

Italy’s FTSE MIB underperformed its European peers, down 1.5%. Banca Popolare di Milano was in the red despite saying net profit rose 24% in 2015.

Oil prices were higher, with West Texas Intermediate up 2.4% at $30.39 a barrel and Brent crude 1.3% higher at $33.32.

“We continue to see weakness in commodity markets which is showing little signs of abating, despite oil finding some relief so far today,” said Craig Erlam, senior market analyst at Oanda.

“Another concern for investors continues to be the European banking sector as negative interest rates and rising non-performing loans put increasing pressure on profit margins and banks’ ability to meet capital requirements.

“With the banking crisis of recent years still fresh in the memory, there are real fears that the banks face big challenges this year. Moreover, the Eurozone recovery – what little we are actually seeing – could be threatened by any renewed weakening in the banking sector and drying up of credit. This is just the latest in a long list of global economic headwinds that have weighed heavily on markets this year.”

Banks were among the worst performers, with the Stoxx Europe 600 index for the sector down 1.9%.

Much weaker-than-expected data added to the negative mood on Tuesday, as figures from the Economy Ministry showed German industrial production unexpectedly fell in December.

Output was down 1.2% from the previous month, when it dropped a revised 0.1%, versus economists’ expectations for a 0.5% rise.

In terms of individual stocks, tour operator TUI AG was under the cosh after it reaffirmed its 2016 earnings guidance but reported a wider net loss for the first quarter.

Pandora fell sharply. Although the Danish jewellery maker lifted its dividend and reported a rise in fourth quarter net profit, the results were below analysts’ expectations.

On the upside, however, French drug maker Sanofi edged a little higher after it posted a drop in fourth quarter net income but said 2016 earnings per share were likely to be stable.

Biotechnology firm Actelion was in the black after reporting a 9% increase in 2015 core earnings.

Vesta Wind Systems was also higher after revealing better-than-expected fourth quarter revenue and upping its dividend.

Legal & General rallied in London after the insurer and investment manager updated the market with details of its annuity bond portfolio.

Supermarket retailer J Sainsbury was also a high riser after market research firm Kantar said it was continuing to outperform the industry.