Europe open: Shares slump as investors go risk off; Telefonica tumbles

(Sharecast News) - European shares tumbled at the open on Tuesday as investors took a risk-off approach and eyed a speech from British Finance Minister Rachel Reeves which was expected to prepare the ground for more tax rises in her upcoming Budget. The pan-regional Stoxx 600 index was down 1.15% at 565 points by 0814 GMT with all major bourses lower by similar levels, Germany's DAX fell 1.5%, France's CAC 40 1.4% and Italy's FTSE MIB 1.1%.

Reeves faces a shortfall of up to £30bn in the public finances and is under pressure to either slash already strained spending or break pledges to not increase taxation.

Goldman Sachs analysts said moves by Reeves to tackle Britain's deficit could push 10-year bond yields down by up to 0.2 percentage points.

Meanwhile a report by the Resolution Foundation thinktank predicted that Reeves's "fiscal headroom" of £10bn will have evaporated due to a bleaker economic outlook, and government u-turns on spending cuts.

Britain's independent Office for Budget Responsibility is also expected to downgrade the UK's trend productivity growth by 0.3 percentage points, creating a £20bn shortfall.

In equity news, share in Telefonica slumped as the Spanish mobile operator halved its dividend under a new strategy.

French voucher and benefit cards supplier Edenred also fell heavily after forecasting a slowdown in annual core profit growth.

Reporting by Frank Prenesti for Sharecast.com