European stocks cautious as focus turns to trade and Brexit

The pan-European Stoxx 600 edged fractionally below the flatline in early trade, autos falling 1% while health care stocks led gains, rising 0.8% as most sectors and major bourses slipped into the red.

Stocks were buoyed Friday by a positive jobs report out of the U.S. which eased fears of a slowdown in the world’s largest economy. However, caution is expected to return on Monday with a fresh round of U.S.-China trade talks due to commence later this week.

Asian stocks traded mixed Monday afternoon as investors await direction on how the negotiations will likely unfold. Bloomberg News reported on Sunday that Chinese officials have narrowed the scope of issues they intend to discuss, with Vice Premier Liu He reportedly telling dignitaries that Beijing will not commit to reforms of industrial policies or government subsidies.

Back in Europe, British Prime Minister Boris Johnson on Sunday urged French President Emmanuel Macron to “push forward” to secure a Brexit deal and reiterated his intention for the U.K. to leave the EU on October 31. Macron said the EU will decide at the end of the week whether a deal is going to be possible based on Johnson’s latest proposal, which has been widely rebuffed in Brussels.

Portugal’s ruling Socialist party (PS) won Sunday’s parliamentary election but fell short of an outright majority, meaning Prime Minister Antonio Costa will return to the negotiating table with one or both of the far-left allies which comprised the previous administration.

In corporate news, the Financial Times reported on Sunday citing two people briefed on the matter that HSBC is planning to cut up to 10,000 jobs in a bid to reduce costs.

Austrian chipmaker AMS said on Friday that its takeover bid for German lighting group Osram had failed, falling short of the required 62.5% shareholder agreement.

On the data front, German industrial orders for August fell by more than expected on weaker domestic demand, reinforcing fears that a manufacturing slump is leading Europe’s largest economy toward recession.

In terms of individual stocks, Lundin Petroleum shares jumped out to 4.6% gains, leading the Stoxx 600, while Osram Licht stock fell 3.8% on the back of the failed takeover bid from AMS.

British building supplies company Travis Perkins slid 4.3% to the bottom of the European blue chip index after issuing a profit warning.