European stocks edged lower on Tuesday, ahead of U.K. manufacturing production data and as a sharp rise in euro zone bonds on Monday highlighted the diverging monetary policy stance between the European Central Bank and the Federal Reserve.
During European morning trade, the fell 0.19%, France’s edged down 0.17%, while Germany’s slipped 0.18%.
Borrowing costs in the peripheral euro zone fell to fresh record lows on Monday, widening the yields between some euro area government bonds and U.S. Treasuries.
The ECB on Thursday cut the main refinancing rate in the euro area to a record low 0.15% and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses. ECB President Mario Draghi also kept the option of quantitative easing on the table.
Financial stocks were broadly lower, as French lender Societe Generale (PARIS:) slid 0.33%, while Germany's Commerzbank (XETRA:) and Deutsche Bank (XETRA:) declined 0.59% and 0.63%.
Among peripheral lenders however, Spanish banks Banco Santander (MADRID:) and BBVA (MADRID:) retreated 0.29% and 1.04% respectively, while Italy's Intesa Sanpaolo (MILAN:) and Unicredit (MILAN:) fell 0.31% and 0.34%.
Elsewhere, Orange (PARIS:) saw shares tumble 1.87% following reports the French telecom group ended talks with Vivendi’s Canal+ over the pay-television operator taking a stake in online video-sharing website Dailymotion.
In London, commdity-heavy slid 0.39%, weighed by losses in the mining sector.
Shares in Rio Tinto (LONDON:) slid 0.27% and Glencore Xstrata (LONDON:) declined 0.62%, while rivals Bhp Billiton (LONDON:) and Vedanta Resources (LONDON:) lost 0.63% 0.92% respectively.
Financial stocks were also broadly lower, as HSBC Holdings (LONDON:) dipped 0.01% and the Royal Bank of Scotland (LONDON:) edged down 0.17%, while Barclays (LONDON:) dropped 0.34% and Lloyds Banking (LONDON:) retreated 0.43%.
Bank Of Ireland (LONDON:) plunged 3.87% after U.S. billionaire Wilbur Ross put on sale his remaining shares in the lender.
On the upside, Imperial Tobacco (LONDON:) rose 0.27% after saying it plans to sell shares of its Logista unit on the Spanish stock exchange in an initial public offering that may value the logistics company at $2.5 billion.
In the U.S., equity markets pointed to a lower open. The pointed to a 0.18% loss, signaled a 0.26% decline, while the indicated a 0.23% fall.
Also Tuesday, official data showed that French industrial production rose 0.3% in April, less than the expected 0.4% increase, after a 0.4% fall in March.
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