- Eurozone manufacturing expands
- Euro-area consumer confidence rises
- US and Chinese manufacturing falls
- US jobless claims drop
FTSE 100: -0.78%
CAC 40: -1.02%
FTSE MIB: -0.72%
IBEX 35: -0.22%
Stoxx 600: -1.00%
European stocks declined as investors weighed a slate of mixed data in the Eurozone, China and the US.
Markit's purchasing managers' index (PMI) for Eurozone manufacturing in January climbed to 53.9 from 52.7 in December, surpassing the consensus forecast of 53 and the 50 level that indicates expansion.
Markit Chief Economist Chris Williamson said recovery remains "fragile" with high unemployment and falling inflation.
"Companies cut employment again, and selling prices continued to fall amid still-weak demand. Deflationary forces are clearly a concern in many countries," Williamson explained.
European Central Bank (ECB) President Mario Draghi is likely to face questions on deflation fears when he attends the World Economic Forum in Davos, Switzerland, tomorrow.
The drop in inflation helped to drive euro-area consumer confidence higher than expected in January.
An index of household confidence in the euro area rose to -11.7 from -13.5 in December, the European Commission in Brussels said in a preliminary report today. Economists had predicted a reading of -13.
"Hopefully, the further strengthening in consumer confidence in January and the help to purchasing power coming from muted inflation across the Eurozone (just 0.8% in December) will increasingly underpin consumer spending and help Eurozone economic recovery to gain traction as 2014 progresses," said Howard Archer, Chief UK and European Economist at IHS Global Insight.
Meanwhile, Barclays changed its ECB interest rate from "on hold" to another refinancing rate cut in February or March by 15 basis points (bp).
The bank also expects the rate for the deposit facility to be cut by 10bp into negative territory.
"Targeted measures to limit the risk of a restraint in credit supply are likely as a next step. As we mentioned previously, we think it could take the form of a conditional LTRO at a shorter than three-year maturity and should come once the ECB has completed the [asset quality review] (around May)" the bank added.
"Should deflationary pressure increase in the coming months, we think an asset purchase programme would be required to effectively dispel the spectre of deflation."
In China, the preliminary reading of Markit/HSBC's PMI for January manufacturing fell for the first time since July to 49.5 from 50.5 a month earlier. Economists had estimated a reading of 50.5.
US manufacturing, existing home sales, jobless claims
Markit's preliminary US manufacturing PMI declined to a three-month low of 53.7 in January, down from an 11-month high of 55 in December. Analysts had expected it to hold steady.
In other economic data, US existing-home sales rose by a lower-than-expected 1% in December, rebounding after a 5.9% drop the month before.
US jobless claims rose 1,000 to 326,000 last week, below the 330,000 forecast.
The mixed data added to more uncertainty surrounding monetary policy ahead of the Federal Open Market Committee meeting next week.
Markets are waiting to see whether policymakers will continue to scale back their asset purchase programme following December's decision to begin tapering.
Nokia fell after reporting a drop in fourth quarter sales and profits.
Pearson declined after the education company said it probably spent more on reorganisation last year than it had forecast.
easyJet slumped after the European carrier said its loss in the first six months of its financial year may increase to as much as £90m from £61m in the same period last year.
Asos declined after Goldman Sachs cut its rating of the online fashion retailer to 'neutral' from 'buy'.
Logitech advanced after the maker of computer accessories swung to a third quarter profit that beat analysts' estimates and raised its full-year guidance.
Celesio gained following a report that one of the company's largest shareholders Franz Haniel & Cie. is set to sell a stake of about 75% in the German drug distributor to McKesson Corp.
The euro rose 0.94% to $1.3675.
Brent crude futures fell $0.362 to $107.880 per barrel, according to the ICE.