European markets mixed as investors consider smaller Fed rate cut; Philips shares up 4%

European stocks were mixed Monday morning, amid waning expectations of an aggressive interest rate cut by the Federal Reserve.

The pan-European Stoxx 600 was flat during early morning deals, with most sectors and major bourses in negative territory.

European Markets: FTSE, GDAXI, FCHI, IBEX

Europe's oil and gas stocks were among the best performers, amid heightened tensions in the Middle East following Iran's seizure of a British tanker in the Strait of Hormuz. Subsea 7, Saipem and Tullow Oil were all trading more than 2% higher Monday morning.

Looking at individual stocks, Dutch health technology company Philips surged toward the top of the index after a stronger-than-anticipated 6% rise in comparable sales for the second quarter. The company cited robust demand for its hospital equipment in China and the U.S. during the three-month period. Shares jumped nearly 4% on the news.

Meanwhile, France's Remy Cointreau tumbled toward the bottom of the European benchmark after Bank of America Merrill Lynch cut its stock recommendation to "underperform." Shares of the Paris-listed stock slipped almost 3%.

On the data front, Britain's latest CBI business confidence indicator for the third quarter is scheduled to be released at around 11:00 a.m. London time.

Leadership contest

Market focus is largely attuned to the U.S. central bank, after a report from the Wall Street Journal suggested the Fed was likely to cut rates by a quarter-point at the July 30-31 Federal Open Market Committee meeting.

Late last week, dovish comments by New York Fed President John Williams had boosted expectations the central bank could cut rates by 50 basis points. However, the New York Fed sought to clarify Williams' comments by saying his speech was not about policy action at the upcoming central bank meeting.

The Wall Street Journal report said global growth concerns and ongoing trade uncertainties could prompt the Fed to make further cuts over the coming months.

Back in Europe, voting in the U.K.'s Conservative Party leadership contest is set to close later in the session, with the next prime minister scheduled to be announced on Tuesday.

Former London Mayor Boris Johnson — widely regarded as the frontrunner in the contest — or Foreign Minister Jeremy Hunt will succeed Theresa May to take office on Wednesday.

In relation to Brexit, Johnson has insisted the U.K. must leave the EU by the October 31 deadline "come what may," while Hunt has said he would be prepared to further delay the withdrawal process, if required, to secure a new divorce deal.

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