European Stocks Slip as Pound Extends Decline

Asian stocks broadly higher

British pound extends decline

Crude oil prices gain

European stocks opened lower after an upbeat session in Asia, while the British pound continued to drop against other major currencies as Brexit fears took center stage.

The pound on Tuesday fell nearly 0.5% against both the U.S. dollar and the euro, after having fallen more than 1% on Monday to its lowest close since March 2017. Investors were reacting to the hardened tone on quitting the European Union without a deal from the new Boris Johnson-led government in the U.K.

The U.K.’s FTSE 100 stock index, which tends to benefit from a weaker pound, notched the biggest rise in the region with a 0.2% increase. The Stoxx Europe 600 fell by 0.4%.

A long-term devaluation of the pound could present inflationary problems for U.K. policy makers. The Bank of England’s next interest-rate decision and report on the inflationary outlook is expected Thursday.

Markets across Asia ticked up, with the Shanghai Composite up 0.3% and Nikkei up 0.4% after the

Bank of Japan

met expectations to hold steady on interest rates.

A slew of economic confidence data will be released by the European Union on Tuesday. Economists are concerned that prolonged weakness in the manufacturing sector, particularly in the eurozone’s largest economy, Germany, may weigh heavily on optimism. U.S.-China trade tensions have dampened appetite for European exports.

The U.S. Commerce Department will release June income and spending data offering a look at the resilience of consumers amid trade tensions.

The average forecast among economists in a Wall Street Journal survey was that incomes would rise by 0.4% in June from a month earlier, and that spending would increase by the same level. The official figures come ahead of Wednesday’s U.S. Federal Reserve meeting, where markets largely expect a cut to interest rates.

In corporate news, several major companies are expected to share results on Tuesday, including

Procter & Gamble
Co.

and

Apple
Inc.

In commodities, global benchmark Brent crude gained 0.6% to $63.99 a barrel. Gold gained 0.3%.

Write to Anna Isaac at anna.isaac@wsj.com

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