Europe's stock markets finished mixed on Tuesday as investors digested a barrage of economic data. Despite a strong start, Paris and Madrid finished only moderately higher and Milan and Frankfurt closed in the red on the back of a marked loss of confidence in the euro area.

The Cac in France finished just 6 higher at 3,160 and the Ibex in Spain was up 50 at 8,445. Meanwhile the FTSE MIB in Italy fell 35 to 15,106, while the Dax in Germany finished 26 lower at 5,644.

The Eurozone's Economic Sentiment Indicator fell 4.7 points to 98.3 in August, according to Eurostat, the Statistical Office of the European Union. This was the worst reading since May 2010, and much lower than predictions of 100.2. This gloomy piece of data follows the recent publication of the Purchasing Managers' Index (PMI), compiled by Markit Economics, which showed that the slowdown in the European economy continued its course in August.

Italy made sweeping changes to its widely-contested €45.5bn austerity package on Monday, in a bid to recover some support after its original plan was met with widespread public anger. Plans for a 'solidarity tax' on high earners and a VAT rise were among the measures to be cut, while the government also included plans for increased enforcement power to tackle tax evasion, reduced cuts to funding for local governments and said that provinces will be abolished, with the number of MPs in Parliament to be cut by half. Some reports, however, point to disappointment amongst investors over the results of today's treasury auction.

Germany delayed its crucial vote to expand the €440bn European Financial Stability Facility (EFSF) by one week to 29 September. A spokesman from Chancellor Angela Merkel's Christian Democrats, said that the postponement is a result of the Pope's visit to Germany between 22 and 25 September.

Spain's consumer price index (CPI) for August rose at an annual rate of 2.9%, compared to the 3.1% rise seen in July, marking the fourth consecutive month of slowing inflation. "As we wait for the final readings to be released in a couple of weeks, it appears that inflation is moderating after reaching a high of 3.8% in April," according to economists at Digital Look.

Steel giant ArcelorMittal finished higher after it announced - along with US coal firm Peabody Energy - that they have reached an agreement with Macarthur for the acquisition of Macarthur Coal after the offer was increased from 15.5 to 16 Australian dollars (A$) per share. The offer is 44% higher than Marcarthur's closing price of A$11.08 on 11 July, the day the approach was disclosed to the market, and values the company at A$4.8bn (£3.13bn).

Cosmetics and shampoo maker L'Oreal fell lower ahead of its results that were to be released after the close.

US brokerage Sanford C. Bernstein has downgraded Swiss foods giant Nestle to neutral, from overweight, and lowered the price target to 52 Swiss francs, from Sfr64.

Bankia fell into the red in Madrid after receiving an underweight recommendation from Nomura. The broker initiated coverage on the savings bank, noting that its valuation and solvency could come under pressure due to its low return levels and large exposure to wholesale financing markets.

Spanish discount grocer DIA reported first half net income of €4.69m compared to the €18.8m loss generated in the same period of last year. Shares finished higher.

Swiss insurer Baloise said first-half net income fell 2.4% to SFr.203.3m from SFr.213.5m the year before. Premium volume increased by 3.2% in local currencies. This was accompanied by a decline of 1.2% in Swiss francs as a result of the weak euro. Premium earnings amounted to SFr.4,522m, down from SFr.4,578m the year before.

Ipsen, the global biotechnology speciality care group, rose as it raised its sales target for 2011 after a well-received set of half-year figures. Sales of primary care products were stable year-on-year, supported by international sales, while underlying recurring operating income jumped 27.1% to €143.9m from €113.2m last year. Consolidated net profit climbed 21.4% to €91.7m from €75.5m the year before.

BC

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