European equities fell sharply on Tuesday as crude oil prices slipped again and companies like BP reported disappointing earnings.
BP fell 8.7 percent, its biggest daily decline since mid-June 2010, after reporting its worst annual loss in more than 20 years in 2015 and announced thousands of job cuts. It maintained its dividend, but the weak results and outlook are likely to put pressure on the company, which has had to increase borrowing.
"BP's dividend is a mile away from being covered by earnings and the market is saying that this is unsustainable," said Steve Clayton, head of equities research at Hargreaves Lansdown." They are a chasm away from their cash break-even oil price of around $60 dollars per barrel."
The pan-European FTSEurofirst index dropped 2 percent, after closing 0.2 percent weaker on Monday. The index is down 8.5 percent so far this year.
The STOXX Europe 600 Oil and Gas index dropped 4.8 percent as Brent oil fell more than 5 percent, hit by worries about demand and rising supply. Hopes for a deal between OPEC and Russia to cut output faded.
Shares in Reposol, Royal Dutch Shell (RYDAF), Eni and Total all fell between 4 and 5 percent.
BHP Billiton fell 6.7 percent after Standard & Poor's cut its credit rating and warned it might be lowered further if measures to shore up cash levels were not taken. BHP is now expected to cut its dividend by half.
Swiss bank UBS also slumped, falling 6.8 percent, after reporting a surprise outflow of funds from its flagship wealth management business. That overshadowed its best results since 2010 and a higher-than-expected dividend.
Infineon fell 5.7 percent after disappointing guidance on margins. Ferrari tumbled 9.6 percent after making a cautious forecast for its financial performance this year.
Shares in Danske Bank rose 4 percent after the company reported fourth-quarter pretax profit that beat forecasts, thanks to higher trading income. The Danish bank also plans to buy back shares.
Sainsbury's rose 2.4 percent after saying it had agreed to buy Argos-owner Home Retail for 1.3 billion pounds ($1.87 billion) to expand its online business. Sainsbury's said it expected the offer to improve earnings per share in the first full year following completion.
Syngenta climbed 3.7 percent on reports saying China's state-owned ChemChina was nearing a deal to buy the Swiss seeds and pesticides maker.
Today's European research round-up
($1 = 0.6947 pounds)
(Editing by Ralph Boulton)