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(Alliance News) - European equities recovered from intraday lows but were unable to shake off selling pressure early Tuesday afternoon, following heavy declines by Tencent and other Chinese technology stocks in the Asian session.

Meanwhile, the US's own big tech sector takes centre-stage later Tuesday, with earnings from Apple and Alphabet.

"European markets opened lower on Thursday, alongside US futures, following strong declines in Asia as China continues to weigh down market sentiment. While the second-biggest economy in the world started its massive regulatory changes on the tech sector, it has recently spread its reforms to other stocks like real estate and education," ActivTrades analyst Pierre Veyret commented.

Corporate earnings in London were mixed, chemicals company Croda International impressed, though shares in disinfectant maker Reckitt Benckiser plunged, weighing on the blue-chip index.

The FTSE 100 index was down 31.75 points, or 0.5%, at 6,993.68 midday Tuesday. The mid-cap FTSE 250 index edged down 14.26 points, or 0.1%, at 22,918.93. The AIM All-Share index was down 2.68 points at 1,231.00.

The Cboe UK 100 index was down 0.4% at 696.47. The Cboe 250 was marginally lower at 20,649.74, and the Cboe Small Companies was down 0.3% at 15,155.81.

Hong Kong's key market index fell 4.2% and Shanghai's by 2.5%, amid continued investor concern about Beijing's crackdown on the technology sector over its holding of personal information.

Tencent shares closed down 9.0% in Hong Kong, while e-commerce firms Alibaba and JD.com fell 6.4% and 9.4%.

Tencent's WeChat app has temporarily suspended registration of new users in mainland China, Reuters reported. The move comes as China's instant messaging platform undergoes a technical upgrade "to align with relevant laws and regulations", the news agency reported.

"Sentiment has worsened towards Chinese companies after Beijing continues to flex its muscles," AJ Bell analyst Danni Hewson commented.

The declines did not stop there. London-listed stocks with an exposure to Chinese technology equities also saw declines.

FTSE 100-listed Scottish Mortgage Investment Trust fell 1.7%, mid-cap Fidelity China Special Situations lost 4.1%, and Pacific Horizon Investment Trust fell 6.5%.

Separately, Reckitt was the worst performing blue-chip stock, down 8.7%. The consumer goods firm swung to a first half pretax loss of GBP1.94 billion from a GBP1.44 billion profit a year earlier. Reckitt suffered a GBP3.00 billion hit related to the remeasurement of IFCN China, the infant nutrition business that it has agreed to sell to Beijing-based investment firm Primavera Capital Group for USD2.2 billion.

Revenue fell 4.5% yearly to USD6.60 billion, but rose 1.5% like-for-like at constant currency.

The company expects like-for-like net revenue growth within the 0% and 2% range the company set out in February. However, it cautioned that cost inflation accelerated during the second quarter.

AJ Bell's Hewson added: "For years, the market has assumed that big consumer goods companies had such strong brands that it was easy to pass on any extra costs to the customer in the form of higher prices. Unilever recently showed that wasn't quite the case, and now Reckitt has also poured cold water on that theory."

Reckitt peer Unilever was 0.1% lower.

At the other end of London large caps, Croda rose 6.2%. It reported "record" first half profit and lifted its payout by 10%.

Pretax profit grew 41% to GBP204.1 million in the six months ended June 30 from GBP144.9 million a year prior. Meanwhile, adjusted pretax profit jumped by 51% year-on-year to a record GBP229.5 million from GBP152.5 million.

Sales are now "well above 2019 levels", Croda said, soaring 39% to GBP934.0 million in the first half, from GBP672.9 million collected in 2020.

Croda continued its 30-year string of increasing returns, raising its interim payout by 10% to 43.5 pence per share from 39.5p last year.

The pound was quoted at USD1.3788 an midday Tuesday in London, down from USD1.3820 at the local equity market close on Monday. The euro fell to USD1.1788, from USD1.1809. Against the yen, the dollar was trading at JPY110.02, down from JPY110.31 late Monday in London.

The number of Covid-19 cases newly reported in the UK has dropped for the sixth day in a row.

The UK recorded a further 24,950 lab-confirmed Covid-19 cases as of 9am on Monday, the government said, down from the 46,558 reported on July 20.

Online-only retailers, among the biggest pandemic winners, were lower midday Monday. AIM-listed pair ASOS and boohoo shed 2.4% and 3.1%, while FTSE 250 firm AO World gave back 1.4%.

The CAC 40 in Paris was 0.3% lower and the DAX 30 in Frankfurt shed 0.5%.

Much like Reckitt in London, payments firm Worldline weighed on the blue-chip index in Paris. It tumbled 9.2%, despite posting stronger interim results.

The Paris-headquartered firm said revenue in the first half of 2021 inched up 0.1% to EUR2.27 billion from EUR2.27 billion. Net income rose by almost double to EUR102 million, from EUR53 million a year ago.

In addition, Worldline said it has signed a binding agreement for the acquisition of Handelsbanken Card in the Nordic region. Wordline said the expansion of Merchant Services activities in northern Europe represents a "significant development" in its consolidation strategy in Europe.

The company did not disclose any financial details for the Handelsbanken Card acquisition but said closing is expected by the end of 2021.

In New York on Tuesday, the Dow Jones Industrial Average was called down 0.3%. The S&P 500 was pointed 0.2% lower and the Nasdaq Composite down 0.1%.

The US earnings calendar continues with iPhone-maker Apple and Google-owner Alphabet after the closing bell in New York on Tuesday.

"Strong performances will greenlight more gains for Wall Street tonight," OANDA analyst Jeffrey Halley commented.

Brent oil was quoted at USD74.67 a barrel early Tuesday, up from USD73.99 at the London equities close on Monday. Gold was priced at USD1,797.32 an ounce, down from USD1,799.56.

Ahead, the economic calendar has US durable goods at 1330 BST.

By Eric Cunha; ericcunha@alliancenews.com

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