Europe Stocks Run Out of Steam on Caution over N. Korea Summit
European stocks markets faltered Tuesday as initial optimism faded over U.S. President Donald Trump's historic summit with North Korean leader Kim Jong Un, dealers said.
Frankfurt, London and Paris had shot higher at the opening bell, following gains across Asia, but then ran out of steam.
"The general reaction in the markets has been fairly muted," OANDA analyst Craig Erlam told AFP.
"While the outcome of the summit is generally positive and gives reason for optimism, there may also be an element of skepticism from investors in regards to what denuclearization means, the timescale and whether the deal will be sustained."
Enthusiasm petered out in Europe as traders looked ahead to key policy meetings of the Federal Reserve and European Central Bank later this week.
"European equities are mixed amid divergent economic news in the region and focus shifting to the upcoming central bank meetings," analysts at Charles Schwab said.
- 'Special bond' -
Trump said he had formed a "special bond" with Kim at their Singpore meeting, with the latter reaffirming his commitment to "complete denuclearization of Korean Peninsula" in a joint agreement signed by the two.
Global equity markets had rallied Monday as traders brushed off a chaotic Group of Seven meeting to focus instead on Trump's summit with North Korea.
However, markets were unhappy with the vague nature of Tuesday's agreement, according to Spreadex analyst Connor Campbell.
"The markets began to unravel the optimism that propelled them higher on Monday, investors seemingly unsatisfied with the vagueness of what was agreed between the U.S. and North Korea," Campbell noted.
Investors also remain concerned about a possible global trade war after the weekend's G7 gathering in Canada ended with Trump withdrawing support for a joint communique and accusing host Prime Minister Justin Trudeau of being dishonest.
That came just after he had hit Canada, Mexico and the European Union with steel and aluminum tariffs, sparking threats of retaliation that some fear could escalate.
In London on Tuesday, stocks and the pound struggled in the face of political uncertainty, as British Prime Minister Theresa May faces a potentially divisive parliamentary vote on her centrepiece Brexit legislation.
- Oil slips -
Official data meanwhile showed that Britain's unemployment rate held in April at 4.2 percent, the lowest level since 1975.
Separately, traders are keenly awaiting this week's Fed and ECB policy meetings. The U.S. central bank is expected to lift interest rates Wednesday but its post-meeting statement will be closely watched for a clue about its plans for future hikes.
On Thursday, ECB officials will likely debate for the first time cutting back on their crisis-era stimulus program.
Oil prices meanwhile turned lower following a report by OPEC which said that the oil cartel's production rose slightly in May.
OPEC and its partners meet in Vienna next week to decide on a possible extension of a production cut deal -- which crucially includes giant producer Russia -- that has been key to the oil price recovery.
The oil market is on high alert ahead of the June 22 meeting, sector analysts reported, saying there were signs that Saudi Arabia and Russia would push for higher production ceilings at the meeting.
- Key figures around 1535 GMT -
London - FTSE 100: DOWN 0.2 percent at 7,721.77 points
Paris - CAC 40: DOWN 0.1 percent at 5,468.39
Frankfurt - DAX 30: UP 0.1 percent at 12,854.74
EURO STOXX 50: UP 0.1 percent at 3,485.11
New York - Dow Jones: UP 0.1 percent at 25,344.19
Tokyo - Nikkei 225: UP 0.3 percent at 22,878.35 (close)
Hong Kong - Hang Seng: UP 0.1 percent at 31,103.06 (close)
Shanghai - Composite: UP 0.9 percent at 3,079.80 (close)
Euro/dollar: UP at $1.1796 from $1.1784 at 2100 GMT
Pound/dollar: DOWN at $1.3364 from $1.3379
Dollar/yen: UP at 110.27 yen from 110.03 yen
Oil - Brent Crude: DOWN 51 cents at $75.95 per barrel
Oil - West Texas Intermediate: DOWN 6 cents at $66.04