Europe open: Cac and Dax setting new 52-week lows as risk aversion picks-up

Stocks are trading sharply lower ahead of the European Union's response to Italy's budget proposals later in the day and as investors try to front-run the risk of another leg lower in risk assets globally.

Summing up the mood in markets, although he was in fact positive on the near-term outlook for US stocks, Chris Beauchamp at IG said: "When the retreat in US equity markets began two weeks ago there were warnings that the first low would not be the last. That prediction appears to be coming true, while on this side of the Atlantic European markets are at two-year lows.

"As the number of earnings misses rises, investors have continued to flee from European equities. If this was an earlier time, the calls for ECB intervention would probably start around now, but investors are all too aware that the ECB’s role of riding to the rescue has come to an end, and the bank seems disinclined to intervene in the Italy budget crisis."

Investors were also treading cautiously ahead of a barrage of central bank policy meetings around the world, including the European Central Bank's on Thursday, and a spate of quarterly results from America's tech giants all at the end of the week.

Against that backdrop, the benchmark Stoxx 600 was down by 1.41% or 5.06 points to 354.68, alongside a 1.85% drop for the German Dax to 11,308.31, while the Cac-40 was off by 1.38% to 4,983.10.

To take note of, Paris's Cac-40 was in the process of setting fresh 52-week lows, joining the Dax who had done the same roughly one week earlier.

Commodities were also lower, dented by the souring sentiment, with front month Brent crude oil futures for prompt month delivery retreating by 1.76% to $78.45 per barrel on the ICE.

Euro/dollar on the other hand was edging higher, gaining 0.12% to change hands at 1.14781.

Tuesday's economic calendar was rather light, aside from the expected response from Brussels to Rome's budget proposals.

At 1500 BST, Eurostat was due to release its preliminary reading for euro area consumer confidence referencing the month of October.

On the corporate side of things, shares in Apple supplier AMS AG were collapsing, falling 27.01% after the 2017 stock market darling and manufacturer of optical sensors for cell phones warned of weaker fourth quarter margins.