By Tommy Stubbington
European shares fell Tuesday, rattled by the latest sign that
the eurozone economy is stagnating.
The Stoxx Europe 600 index was 1.0% lower midmorning, deepening
Monday's decline.
The fall came after data firm Markit's monthly composite
purchasing managers index--a measure of activity in the
manufacturing and services sectors in the currency bloc--for
September fell to 52.3 from 52.5. The figure was the lowest level
in 2014 to date. A reading below 50.0 indicates activity is
declining, while a reading above that level indicates it is
increasing.
The data are likely to put further pressure on the European
Central Bank to come up with fresh stimulus measures to prop up the
flagging recovery. ECB President Mario Draghi signaled Monday that
the central bank remains open to a program of quantitative easing
if inflation stays too low.
"If there's too much bad news the prospect of more from the ECB
isn't enough to hold up markets. We already had a lot of QE
optimism in the price," said Christian Stocker, an equity analyst
at UniCredit.
The latest disappointment for the eurozone overshadowed a
positive lead from Asian markets, where shares rallied after
better-than-expected Chinese manufacturing data. Worries about
slowing growth in China had been behind Monday's declines, which
were led by mining stocks as metals prices took a pummeling.
Mining firms outperformed the wider market Tuesday, with the
Stoxx Europe 600 basic resources falling just 0.4%.
"Although the data offer some near-term relief, China's growth
concerns are likely to continue to weigh the markets," said
analysts at Barclays.
The Australian dollar also staged a modest comeback, rising 0.3%
to $0.890 after tumbling to a seven-month low on Monday, pressured
by the slump in commodity prices.
France continued to lag behind other economies in the region,
with data there pointing to a deepening slump in business
activity.
French shares led declines, with the CAC 40 down 1.5%. Germany's
DAX fell 1.0%.
U.S. stocks were poised to extend Monday's decline, with futures
pointing to a 0.2% opening loss for the S&P 500. Changes in
futures aren't necessarily reflected in market moves after the
opening bell.
In the U.K., the FTSE 100 lost 1.1%. The index was weighed down
by declines in a number of firms viewed as likely takeover targets
for U.S. companies. The losses, which hit shares in pharmaceutical
firms Shire and AstraZeneca, came after the U.S. Treasury
Department on Monday tightened tax rules to deter U.S. companies
from moving their legal headquarters to lower-tax jurisdictions in
so-called inversion deals.
Elsewhere, shares in Austrian bank Raiffeisen tumbled after it
issued a profit warning due primarily to the Ukraine crisis.
U.K. food ingredients manufacturer Tate & Lyle also fell
sharply after saying profit for the year will be lower than
previously expected.
Write to Tommy Stubbington at tommy.stubbington@wsj.com