WSJ: Weak French Data Weighs on European Markets Despite Chinese Boost
Weak economic data from France Monday overshadowed the latest sign that China's economic growth is back on track, putting pressure on European stocks.
The Stoxx Europe 600 was 0.6% lower mid-morning following disappointing manufacturing and services data for the euro-zone.
Data firm Markit said its composite purchasing managers index for the euro zone--which measures activity across both the manufacturing and services sectors--fell to 52.8 from 53.5 in May.
German private sector activity slowed slightly, but the main weak spot was France, where activity declined for a second straight month and at a quickening pace.
"Investors had been expecting a much stronger acceleration in economic activity [in recent months]," said Francois Savary, who oversees around $10 billion of assets as chief investment officer at Swiss bank Reyl.
"This puts a question mark against the expected improvement in corporate earnings for the second quarter."
The decline in equity markets came despite of Chinese data, which pointed to expansion in the manufacturing sector for the first time in six months, boosting stocks across Asia.
HSBC's HSBA.LN -0.33% preliminary purchasing managers index for June rose to 50.8, compared with a final reading of 49.4 in May, putting it above the 50 level that separates expansion from contraction.
"The numbers suggest China's data momentum is finally picking up and growth is stabilizing," said Jan von Gerich, a fixed income strategist at Nordea. NDA.SK -0.31%
Mining stocks, which are highly sensitive to Chinese demand, bucked the wider trend, with the Stoxx Europe 600 basic resources sub-index climbing 0.7%.
But major indexes were under pressure, with Germany's DAX and France's CAC-40 both off 0.8%, and the U.K.'s FTSE 100 down 0.5%.
U.S. stock futures were little-changed, pointing to a flat open for the S&P 500. Changes in futures aren't necessarily reflected in market moves after the opening bell.
In currency markets, the euro fell slightly after the disappointing European data. The common currency dipped 0.2% against the dollar to trade at $1.3581.
The Australian dollar was the main beneficiary of the Chinese data, rising 0.5% against the U.S. dollar to $0.936.
Elsewhere, the ruble gained after Russia's President Vladimir Putin expressed his support for a recently declared cease-fire by Ukrainian government troops.
Mr. Putin stopped short of saying that Russia would try to rein in the separatists it has been accused of arming.
The Russian currency strengthened 0.4% to 34.32 to the dollar.
In commodities markets, oil prices remained elevated amid continuing turmoil in Iraq. Brent crude added 0.3% to trade at $115.10 a barrel, close to last week's nine-month high.
