European stocks down as investors remain cautious

European stock markets slipped on Tuesday as a rebound in the previous session fizzled out, with investors remaining cautious ahead of the first U.S. presidential debate.

The pan-European STOXX 600 was down 0.5% after recording its biggest single-day gain in three months on Monday. Banks handed back some of the previous session's 5.6% gain, while insurers and automakers fell nearly 1% as the global death toll from the COVID-19 pandemic crossed 1 million.

While there were some signs of progress in talks over a fresh U.S. coronavirus relief bill, investors were mostly in a wait-and-see mode as U.S. Democratic presidential nominee Joe Biden and President Donald Trump looked set to square off in their first debate in Cleveland, five weeks before the election.

While Monday’s bounce back helped the STOXX 600 turn positive for the third quarter, the benchmark was on course to end September with a more than 1% drop, its biggest since the peak market selloff in March, amid concerns of a second wave of COVID19 infections, Brexit developments and the upcoming U.S. election.

Among individual movers, Air France KLM fell 4.0% after HSBC downgraded the stock to "reduce" from "hold". British plumbing parts distributor Ferguson jumped 4.8% as it restored its dividend after a series of cost-reduction measures and resilience in its main U.S. business helped it report a 4.1% rise in annual profit. British baker Greggs slipped 3% as it cautioned that the outlook was uncertain because of the pandemic and it would have to cut staff jobs and hours.

Asian markets were down ahead of the first U.S. presidential debate later in the global day, with investors also remaining cautious over the global economy’s prospects as coronavirus deaths surpassed the 1-million mark worldwide. But trade in Asia was subdued ahead of China’s Golden Week holiday, from 1 to 8 October, and other national holidays in the region.