LONDON: European stock markets sank yesterday, sharply reversing initial gains, as investors reacted to poor Chinese manufacturing data and took profits on the first trading day of 2014.
Financial markets also digested mixed news on the health of the eurozone’s manufacturing sector.
At close, London’s benchmark FTSE 100 index ended the day down 0.46 percent at 6,717.91 points. Frankfurt’s DAX 30 fell 1.59 percent to 9,400.04 points and the CAC 40 in Paris shed 1.60 percent to 4,227.28 points.
The sell-off came after all three European markets reaped impressive gains in 2013, with London, up 14.4 percent, Paris gaining 18 percent and star performer Frankfurt soaring 25.5 percent on global economic optimism.
But on Wednesday, Beijing’s official purchasing managers’ index (PMI) for December came in at 51.0, down from November’s 51.4 and below the median 51.2 forecast of eight economists by The Wall Street Journal. Anything above 50 points to growth while a figure below indicates contraction.
It marked the 15th straight month of growth but it is the first time since June that the figure has dipped from the previous month. And yesterday, HSBC said its China PMI dipped to 50.5 last month from 50.8 in November.
The results raised concerns about the state of the world’s number two economy — which is a key driver of regional and global growth — with analysts fearing it has slowed in recent months despite a pick-up in the middle of the year.
In contrast, manufacturing activity in the eurozone posted its strongest growth in 31 months in a fresh sign of recovery, though France remained a weak point, a key survey showed yesterday. Markit Economics revealed that its Eurozone Composite Purchasing Managers Index (PMI) for December rose to 52.7 from 51.6 in November, the third consecutive monthly rise.
Germany, Italy and Spain recorded the strongest rises in output since early 2011 but France on the other hand saw a steepening downturn in part due to a fall in exports.
Asian equities began the year mixed. Hong Kong stocks won 0.14 percent and Sydney added 0.29 percent, while Shanghai sank 0.31 percent and Seoul shed 2.20 percent. Bangkok shares suffered the sharpest fall, plunging 5.23 percent as worries mounted about the country’s political crisis following weeks of anti-government protests. Tokyo and Wellington were closed for public holidays.
In foreign exchange trading the European single currency fell to $1.3675 from $1.3753 late in New York on Tuesday. The dollar dipped to 104.83 yen. The British pound hit a new two-year peak at $1.6603 buoyed by Britain’s recovering economy. The euro meanwhile rose to 83.17 pence from 82.98 pence.
Gold advanced to $1,225 an ounce from $1,201.50 on Tuesday on the London Bullion Market.
Wall Street also began the year on the back foot. In midday trade, the Dow Jones Industrial Average fell 0.69 percent to 16,461.68. The broad-based S&P 500 fell 0.85 percent to 1,832.66, while the tech-rich Nasdaq Composite Index gave up 0.85 percent to 4,140.94 points.
AFP
