European markets fall as sentiment turns wary; Stoxx 600 down 1%

LONDON — European stocks were lower Tuesday, continuing a lackluster start to September trading.

The pan-European Stoxx 600 index sunk 1.07% by 4:00 p.m. London time, with all major bourses and the majority of sectors in the red. Mining stocks lost 3.5% and tech stocks were 2.37% lower, while food and beverages were a rare outlier, adding 0.12%.

Shares of French cable manufacturer jumped over 8% to hit an all-time high following reports that an agreement in principle had been reached for a major submarine power cable between Greece and Cyprus for which it won the contract, according to Reuters.

Regional markets fell on Monday as September trading got underway, after the pan-European Stoxx 600 index clocked a 1.33% gain for August.

Investors are continuing to consider the outlook for interest rates and markets. Markets have fully priced for the Federal Reserve to begin interest rate cuts in September, with the central bank's next meeting set for Sept. 17-18.

A slew of U.S. data is due this week, including the purchasing managers' index, factory orders, jobless claims, nonfarm payrolls and the unemployment rate.

Stoxx 600 index.

In Europe, data released by the British Retail Consortium showed total U.K. sales were up 1% year on year in August — a moderation from 4.1% growth in the same month of 2023. Food sales were up 2.9% annually in the three months to August, as non-food sales dropped 1.7%.

"Despite summer finally making an appearance, and a slight uptick in consumer confidence, shoppers did not catch-up their spending during August, with total sales growth of only 1% reflecting the challenging retail environment that is likely to dominate for the rest of this year," said Linda Ellett, U.K. head of consumer, retail and leisure at KPMG.

"Consumer sentiment is gradually starting to improve, but there still remains some nervousness around potential tax rises and the cost of putting the heating back on when the cooler weather arrives."

The Office for National Statistics, meanwhile, said the number of mergers and acquisitions in the U.K. fell from 463 to 385 between the first and second quarter.

Grant Fitzner, chief economist at the ONS, told CNBC's "Street Signs Europe" that lower interest rates and the uptick in U.K. economic growth this year should create a "more conducive environment to foreign investment mergers and acquisitions."

"I think what's distinct in the last couple of years versus pre-pandemic, is, in recent years, we haven't seen those really big M&As that we have seen on occasion in the past," Fitzner said.

U.S. stocks slipped into negative trade, with the Nasdaq down 1.31%, as traders returned from the Labor Day holiday and braced themselves for a potentially tough month ahead following a strong but volatile August.

Asia-Pacific markets mostly climbed overnight as investors assessed South Korea's August inflation numbers, which eased to its lowest level on a year-on-year basis since March 2021.