European stocks fall ahead of debt talks; DAX down 0.19%

Investing.com - European stock markets were lower on Tuesday, as markets remained cautious ahead of a meeting of euro zone finance ministers later in the day.

During European afternoon trade, the EURO STOXX 50 declined 0.30%, France’s CAC 40 fell 0.26%, while Germany’s DAX 30 slipped 0.19%.

Euro zone finance ministers were to meet later on Tuesday to approve detailed arrangements for scaling up the European Financial Stability Facility. They were also expected to release Greece’s next tranche of financial aid.

Meanwhile, investors were jittery after reports that Standard & Poor's could change France's triple-A rating outlook to negative within days, while Moody's warned it could downgrade the subordinated debt of 87 banks across 15 European countries.

Earlier Tuesday, Italy’s Treasury auctioned EUR7.5 billion of debt and borrowing costs surged to euro-era highs. But market sentiment found support as Italian bond yields came off the highs they hit ahead of the auction, with the two-year yield easing back below the 7% threshold.

Financial stocks were sharply lower, as shares in French lender BNP Paribas tumbled 2.39% and Societe Generale dropped 1.97%, while Germany’s Deutsche Bank declined 0.09%.

Meanwhile, Belgium’s biggest discount-food retailer Colruyt saw shares plunge 9.03%, a four-year low after reporting worse-than-estimated fiscal first-half profit as its expansion in France turned unprofitable.

On the upside, BASF, the world’s largest chemical company jumped 1.70% after the company raised its sales target for the end of this decade as Chief Executive Officer Kurt Bock laid out his strategy after seven months in charge.

In London, FTSE 100 dropped 0.41%, led by sharp losses in the financial sector after the U.K. government’s autumn budget statement.

Chancellor George Osborne indicated that the UK economy was now forecast to grow 0.7% in 2012 down from the 2.5% March forecast, adding that it will take longer than hoped to wipe out the deficit.

Shares in Lloyds Banking plunged 2.81% and the Royal Bank of Scotland slumped 1.27%, while Anglo American and HSBC Holdings dropped 1.01% and 0.98% respectively.

The mining sector also added to losses as shares in Rio Tinto and Bhp Billiton dove 1.81% and 0.75%, while Xstrata declined 0.39%.

Elsewhere, construction company Balfour-Beatty surged 4.74% as its Parsons Brinckerhoff unit won a GBP104 million five-year consultancy contract from Qatar’s government.

In the U.S., equity markets pointed to a moderately higher open. The Dow Jones Industrial Average futures pointed to a rise of 0.17%, S&P 500 futures signaled a 0.29% advance, while the Nasdaq 100 futures indicated a 0.03% increase.

Later in the day, the U.S. was to release industry data on house price inflation as well as a report on consumer confidence.