Poor PMI data turns European shares lower

Reuters Oct 1 | Updated on October 01, 2019 Published on October 01, 2019

European shares dipped on Tuesday as weak factory activity data from across the euro zone spurred fears of an economic slowdown, overturning early gains due to signs the United States was not seeking another radical escalation of its trade war with China.

The pan-European STOXX 600 index had touched a two-month high after opening, tracking gains in Asia and on Wall Street after trade adviser Peter Navarro dismissed reports the White House could seek to force Chinese companies to delist from US exchanges.

The release of IHS Markit's surveys of manufacturing sector purchasing managers (PMI) for September soured the mood and pushed the main index 0.1 per cent into the red.

“The latest surveys from Spain, Italy, France and Germany have served to reinforce the fragility of the manufacturing sector in Europe,” said Michael Hewson, chief market analyst at CMC Markets.

Countering those losses was a 0.7 per cent jump in the automobiles & parts sector after French car manufacturers' body CCFA said the decline in its domestic market should slow down this year and end 2019 at stable levels.

Renault and car parts maker Faurecia led gains in the sector, each rising 2 per cent, while German autoparts maker Hella gained 1.1 per cent.

Gains in AMS, Dialog and STMicro, pushed the technology sector 0.6 per cent higher, after Apple Inc's Chief Executive Officer Tim Cook was quoted as saying that sales of new range iPhones had started strongly.

The STOXX 600 gained around 2 per cent in the third-quarter compared to 12 per cent in the first three months of this year, as the US-China trade war worsened economic prospects and slowed a global stocks rally that dates back almost a decade.

“The outlook for the next quarter depends on the trade war and I would say is broadly positive,” said Rachel Winter, investment director at asset manager Killik & Co.

“We'll certainly have some progress, perhaps a partial resolution will happen. But I will be very surprised to see a complete resolution within the short term.”

Among other stocks, Air France-KLM jumped 1.4 per cent, after BofA Merrill Lynch reinstated coverage on the French carrier with a “buy”. The brokerage also set “buy” recommendations for British Airways owner IAG and Wizz Air.

Danish facility services provider ISS fell 1.6 per cent after Jefferies downgraded the stock to “hold”.

Published on October 01, 2019
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