European stock markets retreated on Tuesday, with the biggest declines in share prices seen in Frankfurt following a profit-warning from German chemicals giant BASF.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, July 8, 2019. (Photo: VCG)

Asian indices mostly closed down as investors awaited the start of testimony from US Federal Reserve head Jerome Powell later.

Clues on the outlook for US interest rates are keenly awaited after the country's recent strong jobs report threw into doubt expectations for a deep cut in American borrowing costs later this month to help boost the economy.

"Equities are weaker and the dollar firmer as the prospect of the Fed not being as dovish as the market wants it to be takes the shine off things," said Neil Wilson, analyst for Markets.com.

Frankfurt was down a hefty 1.3 percent heading into midday trading, while London fell 0.3 percent and Paris shed 0.7 percent compared with the closing levels on Monday.

The euro and pound dropped versus the dollar, while oil prices rose.

Shares in BASF slumped 4.7 percent to 59.69 euros after the company slashed its earnings forecast for the full year, blaming the impact of trade conflicts on the industry.

"European stocks have resumed their downward move... with a warning from BASF providing another indication that the economic picture remains gloomy," said Chris Beauchamp, analyst at IG trading group. 

"In this context, a rate cut from the Fed may have little impact."

Topping London's FTSE 100 index meanwhile was UK online supermarket Ocado, whose shares jumped 5.25 percent to £12.32 after the company posted strong revenues.

Traders brushed off news that a fire earlier this year at an Ocado warehouse operated by robots had cost the group almost £100 million ($125 million, 111 million euros).

Elsewhere on Tuesday, the Wall Street Journal reported that Richard Branson's Virgin Galactic will become the first publicly-traded space tourism project thanks to a New York-listed company's investment worth about $800 million.

Social Capital Hedosophia Holdings Corp. will take a 49-percent stake in Virgin Galactic, according to people familiar with the matter, the WSJ said.

The capital injection from the special-purpose acquisition company, or SPAC, will enable British billionaire Branson to fund Virgin Galactic until its spaceships are able to commercially operate and become profitable, the paper added.

Key figures around 0945 GMT

London - FTSE 100: DOWN 0.3 percent at 7,523.56 points

Paris - CAC 40: DOWN 0.7 percent at 5,549.03

Frankfurt - DAX 30: DOWN 1.3 percent at 12,377.02

EURO STOXX 50: DOWN 0.8 percent at 3,495.76

Tokyo - Nikkei 225: UP 0.1 percent at 21,565.15 (close)

Hong Kong - Hang Seng: DOWN 0.8 percent at 28,116.28 (close)

Shanghai - Composite: DOWN 0.2 percent at 2,928.23 (close)

New York - Dow: DOWN 0.4 percent at 26,806.14 (close)

Euro/dollar: DOWN at $1.1197 from $1.1211 at 2040 GMT

Dollar/yen: UP at 108.91 yen from 108.75 yen

Pound/dollar: DOWN at $1.2465 from $1.2512

Brent North Sea crude: UP 35 cents at $64.46 per barrel

West Texas Intermediate: UP 28 cents at $57.94 per barrel