European stocks lower as U.S.-Iran ceasefire deadline looms

LONDON — European stocks reversed direction on Tuesday afternoon, moving lower as investors gauge developments ahead of the expiry deadline for the two-week ceasefire between the U.S. and Iran.

The pan-European Stoxx 600 was down 0.7% at 3:55 p.m. in London (10:55 a.m. E.T.), reversing morning gains, with the region's major bourses and sectors mixed.

Global markets are still assessing prospects for peace talks and the possibility of escalation.

U.S. President Donald Trump told CNBC's "Squawk Box" on Tuesday that he expects to make a "great deal" with Iran, adding that U.S. has "taken out" Iran's navy and air force. "It is regime change, no matter what you want to call it."

However, Trump added: "I expect to be bombing. We are ready to go... the military is raring to go."

The two-week ceasefire agreed between the U.S. and Iran was set to expire at 12:00 a.m. GMT (Tuesday, 08:00 p.m. ET), although Trump told Bloomberg on Monday that the truce would end "Wednesday evening Washington time."

Trump again threatened Iran with overwhelming military force on Monday, saying "lots of bombs [will] start going off" if no deal is reached before the shaky ceasefire expires.

The latest threat, made in a phone call with a PBS News reporter, came as the status of fresh U.S.-Iran peace talks have grown increasingly opaque.

Associated British Foods said Tuesday it was spinning off fashion retailer Primark from its food business. The food business, known as FoodCo, will retain the ABF name following the demerger, with George Weston named CEO. Eoin Tonge will be CEO of Primark.

Both companies will be listed on the London Stock Exchange.

ABF shares were 1.8% lower after the company reported group revenues of £9.47 billion ($12.8 billion) for the half-year to February 28. Adjusted operating profits came in at £691 million, down 18% from £835 million for the same period last year, with revenues falling 2%, as Weston acknowledged a "challenging" first half.

Spain's Puig surged 6.1% following reports that Estée Lauder Companies had tapped J.P. Morgan for 5 billion euros to finance its acquisition bid for the Barcelona-headquartered fashion and beauty imprint.

Royal Unibrew plunged to the bottom of the Stoxx 600 index, falling 25% after the Danish beer, soda and energy drinks maker said it was ending its partnership with PepsiCo in northern Europe.

Meanwhile, U.K. unemployment fell by 4.9% in the three months to the end of February, according to data published by the Office for National Statistics. The slide was a sharper fall than anticipated, with consensus estimates suggesting unemployment would hold steady at 5.2%. Wage growth, meanwhile, was up 3.6% on the year.

Overnight, Asia-Pacific markets were mixed, while U.S. stock futures inched higher early Tuesday after the Nasdaq Composite snapped a 13-day win streak during the regular session.

Earnings reports come from Rio Tinto, Thales, ASM International, Beiersdorf, Moncler and Vivendi.

— CNBC's Kevin Breuninger contributed to this market report.