Europe open: Stocks dip on bad new out of Asia

Stocks are drifting slightly lower at the start of trading as investors digest news that the second round of nuclear talks between the US and North Korea has ended without a deal, reportedly after Pyongyang called on Washington to lift all its sanctions, and a weaker reading on China's manufacturing sector.

The US President later described the two days of talks as "productive" and reports indicated that North Korea had committed to not resuming its missile tests, but the news was nevertheless taken poorly.

Commenting on the news out of Asia, IG's Chris Beauchamp said: "The sudden end to the Trump-Kim summit, and ongoing tensions between India and Pakistan, continue to weigh on global sentiment, though at the moment this weakness still looks like a sell-off in search of a reason."

Against that backdrop, as of 0900 GMT the benchmark Stoxx 600 was off by 0.37% at 371.20, alongside a 0.30% dip on the German Dax to 11,453.55, while the FTSE Mibtel was drifting lower by 0.15% to 20,467.75.

Pacing losses, the Stoxx 600's gauge of shares in Basic Resources companies was down by 1.98% after the official Chinese manufacturing sector Purchasing Managers' Index fell from a reading of 49.5 for January to 49.2 in February, contrary to expectations for an unchanged reading.

In the background meanwhile, analysts were mulling how much longer the current rally in global equities might have left to run.

As Barclays Research pointed out, the MSCI World index had its best start to the year since 1991, yet equity flows had remained negative, mutual funds were still shifting towards bonds and cash, and the benchmark was now 'overbought'.

"It is likely that if equities and volatility keep normalising, macro hedge-funds, CTAs and target volatility funds will increase risk exposure in the coming weeks.

"However, we believe that fundamental investors need to see good news again before adding back to equities. There is indeed a strong relationship between equity flows and activity surprises."

In economic news, the rate of expansion in Sweden's gross domestic product picked-up substantially at the end of 2018, official data showed.

GDP jumped back at a quarter-on-quarter pace of 1.2% in the fourth quarter following a dip of 0.1% over the previous three months.

Meanwhile, in France, the year-on-year rate of gains in harmonised consumer prices accelerated from a 1.4% pace for January to 1.5% for last month, INSEE said, but nevertheless fell well short of the 1.8% clip anticipated by the consensus.

For later in the day, the market spotlight would be on a preliminary reading on US fourth quarter GDP at 1330 GMT, followed by a spate of speeches from top officials at the Federal Reserve.

Zalando was the standout gainer in early trading, with its shares rocketing by 17% after the German online fashion retailer posted a 24.6% jump in sales growth for the fourth quarter.

Analysts at Macquarie reiterated their 'outperform' rating on the stock on the heels of those figures, highlighting to clients how the firm had introduced delivery charges for lower basket values in more countries.

"We estimate earnings potential of c5% to our FY19 EBIT and another 9.5% should Zalando introduce charges in all other markets," they told clients.

Stock in French military jet-maker, Dassault Aviation, was also flying higher after the company reported in with a 87% surge in operating profits to €669m and projected higher net sales for 2019.