Europe open: Stocks retreat as investors take profits in technology space

Stocks in Europe have started the morning down, tracking a sharp intra-day reversal lower in US stocks overnight after authorities in the state of California reversed the opening of bars and restaurants in response to the growing number of novel coronavirus infections.

The latter, said Michael Hewson at CMC Markets UK, fed into concerns around the strength of any recovery in the US economy ahead of the start of the earnings season.

Indeed, the second quarter earnings season in the States was set to kick-off in just a few hours with a report from banking giant Citigroup.

Against that backdrop, as of 1030 BST the pan-European Stoxx 600 was trading 1.24% lower to 365.91, led by a 3.29% decline in Technology issues, mimicking losses in their US counterparts during the previous session.

Shares of Nemetschek, Infineon, Sartorius Stedim Biotech, Logitech and Bechtle were all at the bottom of the Stoxx 600 leaderboard.

Germany's Dax meanwhile was off by 1.42% at 12,619.06, although Milan's FTSE Mibtel was faring slightly better, trading down 0.89% to 19,826.53.

On the economic side of things, Chinese foreign trade data for June printed came in ahead of economists' forecasts, but a reading on UK gross domestic product for May printed well below forecasts due to the drag from lockdown measures on activity in services.

On the positive side of the ledger, the ZEW institute's economic confidence gauge for the Eurozone rose by 1.0 point in July to reach 59.6, marking its fifth consecutive monthly increase and its highest reading since May 2015.

Nonetheless, Tomas Dvorak at Oxford Economics said: "Going forward, we expect the pace of the recovery to soften after the initial bounce-back, as weak external demand, supply chain disruptions and limited operating capacity will weigh on the industrial sector.

"We expect the industrial production to only reach in 2019 Q4 level by the end of next year."