Europe open: Markets mostly lower as trade relations, Brexit in focus

European stocks were mostly lower on Monday morning as hopes of a Sino-US trade deal were reinvigorated and the European Union continued to contemplate granting a three-month Brexit extension.

At 0855 GMT, the Stoxx 600 was 0.1% lower at 397.66, as Germany's Dax climbed by 0.2% to 12,919.74 and the French CAC 40 fell by 0.1% to 5,718.91. Meanwhile, London's FTSE 100 was down by 0.4% at 7,298.02.

The US trade representative's office and China's commerce ministry have both made positive noises about the state of trade talks, with the former stating that officials from the two superpowers were "close to finalising" the first phase of a deal following telephone negotiations on Friday.

Markets.com analyst Neil Wilson said: "The mood music is sounding better on trade for sure, but disappointment is only ever a presidential tweet away. US stocks are close to record highs once more but the bulls failed to push the S&P 500 over the line on Friday."

In Brexit news, UK lawmakers continue to await an offer of a deadline extension from the EU, with media reports suggesting French representatives are likely to agree a new 31 January leaving date.

In the meantime MPs will vote on Boris Johnson's plan for a 12 December election, which requires a two thirds majority and is unlikely to win the backing of Labour MPs who want the Prime Minister to rule out the possibility of a no-deal scenario.

CMC Markets analyst David Madden said: "The Labour Party are doing all they can to box in Boris, but the SNP plus the Lib Dems are trying to push for a pre-Christmas election too.

"The smaller opposition parties have drawn up a bill that would simply require a majority in the House of Commons, and the aim is to hold an election on the 9 December."

Among individual stocks, HSBC was the top faller on the Stoxx 600 after it reported a drop in third-quarter profit, cautioned over a "challenging" environment and said the outlook for revenue growth is softer than it expected at the half-year.

Spanish lender Bankia was also lower after it booked a 23% drop in third-quarter net profit as low interest rates ensured that margins remained under pressure.

LVMH was higher after the French luxury group confirmed it had held preliminary discussions about a possible acquisition of US jeweller Tiffany & Co. "There can be no assurance that these discussions will result in any agreement," it said, as the company responded to weekend press reports that it had approached Tiffany with a $14.5bn offer.

Videogame developer Ubisoft was also in the green, recovering slightly after its shares tanked on Friday on the back of its newly-announced plans to delay the launch of three upcoming games until the next financial year.