Europe open: Markets drop with Sino-US trade in focus, Unilever eyed

European shares were lower on Tuesday morning, pausing for breath after nearing multi-year highs in the previous session on the back of a ‘phase one’ trade agreement between China and the US.

At 0900 GMT, the Stoxx 600 was 0.6% lower at 415.08, as Germany's DAX fell by 0.4% to 13,355.25 and the French CAC 40 contracted by 0.3% to 5,974.56. Meanwhile, London's FTSE 100 was down by 0.1% at 7,512.68.

Sino-US relations remained in focus, as details concerning Chinese agricultural purchases remained unclear and the South China Morning Post said Beijing faced a "huge challenge" to hold down its end of the trade agreement.

Oanda analyst Craig Erlam said investors would be hoping that the final tweaking of details in the deal will take less time to sort out than the last changes, which took the best part of two months.

"As long as both sides continue to talk up the phase one agreement, then Santa may well deliver the end of December rally that every investor craves this time of year.

"We just have to hope that we're not getting overly excited about an exquisitely wrapped lump of coal," added Erlam.

Among individual stocks, British-Dutch consumer goods company Unilever was under the cosh after it cautioned that full-year underlying sales growth would be "slightly below" guidance of the lower half of its 3-5% multi-year range amid challenges in some of its markets.

AJ Bell analyst Russ Mould said: "The company blames an economic slowdown in South Asia and tricky trading conditions in West Africa as well as continued challenges in developed markets including North America.

"The reality is the consumer goods giant has been struggling to deliver organic growth for some time."

Shares of Fiat Chrysler were firmer after Reuters said sources had informed it that the carmaker's board are meeting on Tuesday to discuss a $50bn merger with Peugeot.

German defence contractor Rheinmetall was on the rise after it was initiated with a 'buy' rating by analysts at Goldman Sachs.

Classifieds specialist Scout24 climbed amid reports that it is closing in on a deal to sell its AutoScout24 business for €2.5bn (£2.15bn).

Voestalpine was in the red after the Austrian steelmaker revealed plans on Monday to cut its dividend payout as it warned on full-year profits due to write-offs and provisions.