Europe open: Stocks nudge lower as oil retreats, ahead of Yellen speech

European equity markets nudged lower in early trade as oil prices fell back and investors awaited a speech from Federal Reserve Chair Janet Yellen.

At 0900 BST, the benchmark Stoxx Europe 600 index was down 0.1%, Germany’s DAX was off 0.2% and France’s CAC 40 was 0.3% weaker.

At the same time, oil prices were on the back foot after Brent crude breached the $50 a barrel mark on Thursday for the first time since November. West Texas Intermediate was 0.7% lower at $49.16 a barrel and Brent crude was down 0.7% at $49.25.

“Markets here, and in the US and Asia have lost momentum after big gains midweek,” said Lee Wild, head of equity strategy at stockbroker Interactive Investor.

“A drop in oil prices back below $50 and caution ahead of Fed chair Janet Yellen's speech tonight will make it difficult for them to make much headway, especially ahead of a long weekend in the UK. Revisions to US first-quarter GDP later could also fuel another dollar rally. A Fed rates meeting next month, the EU referendum and weak corporate earnings make this a tricky time for investors, and many are sitting on cash.”

Market participants will be watching out for Yellen’s speech on the economy at Harvard at 1530 BST, as they look for further clues on the timing of the next Fed rate hike.

“Sentiment towards the US economy has improved this month with an impressive array of domestic data bolstering speculation that US rates could be increased in June or July. With retail sales, inflation and new homes sales exceeding forecasts, the prerequisites for another US rate hike in Q2 could be fulfilled if US GDP and next week’s non-farm payrolls exceed expectations,” said FXTM Research Analyst Lukman Otunuga.

In corporate news, Spain’s Banco Popular was under the cosh again a day after it announced a rights issue.

AstraZeneca edged lower. The pharmaceuticals giant announced positive results for its Faslodex drug for the treatment of metastatic breast cancer in post-menopausal women who have not had prior hormonal treatment for home-receptor-positive breast cancer.

On the downside, however, it also said the US Food & Drug Administration would not approve one of its new drugs for the treatment of high potassium levels because of a manufacturing problem.

Swiss pharmaceutical company Roche rallied after announcing positive results from its trial of drug Gazyva.

Building materials group Wolseley popped higher after it said Simon Nicholls will not be taking up his role as chief financial officer later this year, as announced back in January. The company did not provide any reasons as to why.

The second release of first-quarter US GDP is due at 1330 BST, while University of Michigan consumer sentiment is at 1500 BST.