European equities fell sharply on Tuesday as crude oil prices slipped again on oversupply concerns and companies such as oil major BP disappointed on the earnings front.

Swiss bank UBS also slumped, down 7 per cent, after reporting a surprise outflow of funds from its flagship wealth management business, overshadowing its best annual results since 2010 and a higher than expected dividend payout.

BP fell 7.3 per cent after reporting its worst annual loss in more than 20 years in 2015. It announced thousands more job cuts following a deep rout in oil prices and maintained its dividend, but the weak results and outlook are bound to pile pressure on the company which has had to increase borrowing.

“BP hasn’t blinked on its dividend, but it is playing chicken with the oil price. BP’s dividend is a mile away from being covered by earnings and the market is saying that this is unsustainable. They are a chasm away from their cash break-even oil price of around $60 dollars per barrel,’’ said Steve Clayton, head of equities research at Hargreaves Lansdown.

The STOXX Europe 600 Oil and Gas index dropped 3.4 per cent after crude oil prices fell again on worries about top energy consumer China and rising oil supply. Shares in BG Group , Royal Dutch Shell and Tullow Oil fell 1.6 to 3.7 per cent.

The pan-European FTSEurofirst index dropped 1.5 per cent by 0904 GMT, after closing 0.2 per cent weaker in the previous session. The index is down more than 7 per cent so far this year.

BHP Billiton fell 4.8 per cent after Standard & Poor’s cut the world’s largest miner’s credit rating and warned it might be lowered further if measures to shore up cash levels were not taken, cementing expectations BHP will slash its dividend for the first time in 15 years.

However, some companies advanced on the back of encouraging results and positive company news.

Shares in Danske Bank rose 4 per cent after reporting a forecast-beating pretax profit in the fourth quarter, thanks to higher trading income. The bank also plans to launch a share buy-back programme.

Sainsbury’s rose 2 percent after Britain’s second biggest supermarket agreed to buy Argos-owner Home Retail for £1.3 billion ($1.9 billion) to boost its online business and expand sales of items such as electrical goods.

Sainsbury’s said it expected the offer to boost its earnings per share in the first full year following completion.

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