Europe open: Stocks dip as investors mull EU reconstruction fund

Early gains for stocks have given way to modest selling across the Continent as investors monitor the news-flow around a proposed €500bn reconstruction fund for the euro area.

In a potentially landmark agreement, the day before France and Germany had announced their combined for such a fund financed by the joint issuance of debt at the European Union level.

Nevertheless, Austria, Denmark and the Netherlands continued to hold out against the idea of grants to other member states.

Against that backdrop, as of 1030 GMT, the benchmark Stoxx 600 was down 0.74% at 339.05, alongside a 0.42% dip for the German Dax to 11,015.30 while the FTSE Mibtel was declining by 1.03% to 17,221.86.

In parallel, longer-term Italian sovereign debt was adding to the previous session's gains, pushing the yield on the benchmark 10-year bond down by four basis points to 1.63%.

Front dated Brent meanwhile was drifting 0.72% lower to $34.56 a barrel on the ICE.

To take note of, risk assets had rallied hard the day before after US central bank chief, Jerome Powell, reiterated a call for further government support measures in the US and thanks to positive early trial data on Moderna Therapeutics's Covid-19 vaccine candidate.

The latest economic data out on Tuesday was mixed.

On a positive note, the closely-followed ZEW institute's gauge of German economic confidence bounded higher for a second month in a row.

It rose by 22.8 points from the month before to reach 51.0 (consensus: 33.0).

"Optimism is growing that there will be an economic turnaround from summer onwards [...] According to the financial market experts surveyed, economic growth is expected to pick up pace again in the fourth quarter of 2020. However, the catching-up process will take a long time. Only in 2022 will economic output return to the level of 2019," said ZEW president Professor Achim Wambach.

Nevertheless, the hard data continued to make for grim reading, with Eurostat reporting a 14.1% month-on-month decline in construction output.