European stocks dropped on Monday as traders braced for a crucial earnings season amid concerns about more Covid curbs in China as cases rise again.

The Stoxx Europe 600 index fell 1.4 per cent as of 8.02am in London, following three days of gains. Miners led the declines among sectors today.

Investors are preparing for the second-quarter earnings season as concerns rise that soaring inflation is weighing on consumer spending and crimping margins. The declines in Europe came as Chinese stocks had their worst day in about a month as the Covid resurgence combined with fresh fines for tech giants hit markets.

“Earnings expectations will come down this year and probably next year as well, which is somewhat priced, Barclays Private Bank chief market strategist Julien Lafargue said on Bloomberg Television. “The question is how big are the cuts we are going to see, he added. - Bloomberg