Europe open: Markets lower after Sino-US relations sour

European stocks were slightly lower on Wednesday morning as Sino-US relations soured over Hong Kong, while hopes for a swift Brexit deal were dented on worries the Democratic Unionists could still scupper an agreement.

At 0902 BST, the Stoxx 600 was 0.3% lower at 392.95, as Germany's Dax remained flat at 12,627.86 and the French CAC 40 dropped by 0.2% to 5,689.47. London's FTSE 100 was roughly unchanged at 7,211.34.

Hopes for progress in trade negotiations between the US and China diminished after the House of Representatives passed a bill that would see the Hong Kong lose its special trading status if city authorities are found to have breached human rights and the rule of law.

A Chinese government spokesman warned that Washington should "stop meddling" in Hong Kong's affairs and warned that Beijing would take "strong measures" to counter the proposed legislation.

AxiTrader analyst Stephen Innes said that, though stripping Hong Kong of special status remained unlikely, passing the bill could derail trade talks so badly that it would not matter who is in power after the 2020 presidential election.

Despite reports on Tuesday evening that the UK and EU were closing in on a Brexit deal, sentiment had stumbled by the morning after Democratic Unionist Party leader Arlene Foster appeared to admit reservations over the proposed agreement.

EU and UK officials will resume Brexit talks later in the day ahead of a summit of EU leaders on Thursday.

Rabobank analysts said: "Even if the DUP and hard-line Conservatives do ultimately lend their support, there is still a good chance that Boris Johnson will miss his own 31 October deadline. A short extension may be necessary simply to get all the technicalities in place."

"And in the worst case, if Johnson cannot gather the domestic support he needs, the UK could be looking at membership well into next year."

Among individual stocks, Signify, the Dutch company formerly known as Philips Lighting, was among the top risers after it agreed to purchase Eaton's lighting business for $1.4bn.

Swiss pharmaceutical firm Roche was in the green after it hiked its annual sales outlook for a third time and said it expected to complete its takeover of Spark Therapeutics before the end of the year.