European stocks under pressure as US recession fears weigh

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European stocks are seen struggling for direction Wednesday, with investors still unnerved by fears of a potential U.S. recession.

Britain’s FTSE 100 is seen rising 6 points at the open to 7,208, Germany’s DAX increasing 14 points to 11,435 and France’s CAC falling 2 points to 5,203, according to IG index data.

Market players are taking a cautious stance as worries of a slowdown in economic growth linger. U.S. bond markets have in recent days signaled a U.S. recession may be coming, with the U.S. 10-year Treasury yield falling below that of the 3-month bill for the first time since 2007 last week.

The drop marked what is known as a yield curve inversion, where the rate on short-dated paper climbs above that of long-term bonds. A lift in the 10-year yield Tuesday gave traders some relief, but the benchmark has retreated slightly since, and is still below the 3-month yield.

Elsewhere, Brexit uncertainty continues to weigh on sentiment. U.K. Prime Minister Theresa May is set to address lawmakers of her own Conservative Party Wednesday, with reports saying she could lay out her own exit date in return for support for her twice-rejected EU withdrawal deal in Parliament.

British lawmakers are due to hold a round of so-called indicative votes — essentially votes on what the course of Brexit should look like — later in the day. This comes after parliamentarians took control of the Brexit process from May’s government.

Elsewhere, European Central Bank President Mario Draghi is due to speak at a conference Wednesday morning. The institution cut its growth forecast for 2019 euro zone growth sharply at its most recent policy meeting and pushed back any prospect of a rate hike to at least 2020.

On the corporate front, U.K. insurance market Lloyd’s of London is due to report earnings. The financial institution has been the subject of controversy after a recent Bloomberg report highlighted a deep-rooted culture of sexual harassment at the group.

In dealmaking news, German pharmaceutical company Merck KGaA made a hostile $5.9 billion takeover bid for chemicals firm Versum Materials Tuesday, bypassing management and offering to buy out shares directly from investors.

In terms of economic data, French and Italian consumer confidence, Italian business confidence and French unemployment benefit claims are due to be released throughout the morning.

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