European stocks remained sluggish on Tuesday following a quiet start to the week, with persistently high oil and gas prices and lingering inflation concerns keeping investors cautious.
The EuroStoxx 50 traded flat by midday, down just 0.07% at 6,399.55 points. Britain's FTSE 100 was little changed. But the Swiss SMI dropped more sharply, falling 1.18% to 14,110.76 points, weighed down by steep losses in Novartis shares.
"Investors are treading on the brakes, waiting for important data and interest-rate decisions later in the week," said Jürgen Molnar, a capital-markets expert at Robomarkets. Oil prices remain "the feverscope of equity markets."
Brent crude approached the round $100-a-barrel mark in morning trading. Traders were awaiting details of a proposed agreement between Iran and Oman to regulate shipping through the Strait of Hormus, and watching how the United States would respond. The ongoing Middle East conflict continues to fuel inflation worries and add uncertainty to markets, with higher interest rates likely to be priced in for longer, Molnar said.
Investor focus is now on US inflation data, expected to shed light on the Federal Reserve's monetary-policy room. Markets increasingly price in a Fed rate hike next week, but attention first turns to the European Central Bank, which decides on its key rate on Thursday.
On the corporate side, Novartis shares fell more than 9%, making them the worst performer in the Swiss SMI. The selloff followed another failed clinical trial, this time for a drug targeting myotone dystrophy type 1 — a muscle disease. The treatment had been seen as the cornerstone of Novartis's acquisition of US firm Avidity Biosciences for $12 billion in the spring. Analysts are questioning the pharma giant's longer-term growth targets after the setback.
In contrast, generic-drug specialist Sandoz impressed with growth ambitions exceeding analyst expectations. Its shares rose around 4% at the open before settling to a slight gain.
