Europe open: Shares fall sharply as UK govt u-turns on tax cut for the rich

European shares opened sharply lower on Monday, as the UK government was forced into a humiliating u-turn on a planned tax cut for the wealthy and oil prices spiked on reports of output cuts by major producers.

Equities followed a weak trading session in Asia-Pacific markets. The pan-European Stoxx 600 index fell 1.24% in early deals. Britain’s FTSE 100 was down 0.91% after Finance Minister Kwasi Kwarteng was forced to reverse a cut in the top rate of income tax after the measure sent the pound into freefall last week.

“Sterling is moving higher but has pared back its more convincing gains from earlier in the session, trading modestly in the green against the dollar, euro and Japanese yen,” said Victoria Scholar, head of investment, at Interactive Investor.

On oil markets, Brent crude futures and West Texas Intermediate futures jumped after reports that OPEC+ is considering an oil output cut of more than a million barrels per day.

In equity news, Credit Suisse fell 9% after reports that the bank's executives spent the weekend reassuring large clients, counterparties and investors about its liquidity and capital position.

Carnival shares continued to slump after Friday's losses when the cruise operator said it was expecting to report a loss for the fourth quarter. Travel company Tui also lost ground, along with budget airlines easyJet and Wizz Air.

Reporting by Frank Prenesti at Sharecast.com