Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany. Photo: Reuters

Financials dragged down European equity indices this morning, with Muenchner Rueckversicherung, Germany’s largest reinsurer, down almost 6%, followed by nearly 3% declines in Deutsche Bank and Banco Bilbao.

With the European Central Bank stuck on hold in the course of Europe’s dicey political cycle, the negative-to-low interest rate environment is a drag on the financials. Monday’s relief rally after the French elections gave way to slow bleeding in equity prices.

A cautious outlook from chemical giant BASF also weighed on the market. Despite the highest profits in a decade, BASF warned that softness in the auto sector and other major users of chemical products might affect earnings over the next year.