- UK manufacturing index falls
- US manufacturing survey improves
- Federal Reserve officials sound more eager to taper
- Euro/dollar falls on interest rate cut speculation
- Italian coalition to last until 2015, says PM Letta
FTSE 100: -0.05%
CAC 40: -0.69%
FTSE MIB: -0.97%
IBEX 35: -0.74%
Stoxx 600: -0.34%
European equities ended the week lower following disappointing UK manufacturing data.
The UK manufacturing sector purchasing managers index (PMI) slipped to 56 in October from a revised reading of 56.3 in September, missing the 56.4 forecast. A reading above 50 signals expansion.
"Nevertheless, the index was still significantly above the long-run average of 51.3 and is consistent with a solid pace of expansion similar to what it experienced during the revival of manufacturing in 2010-11," according to Barclays.
In the US, the Institute for Supply Management's factory index climbed to 56.4 in October, the highest since April 2011, from 56.2 a month earlier. It exceeded the consensus for a reading of 55.
Earlier the US Markit manufacturing PMI nudged higher to 51.8 in October, after a reading of 51.1 in the prior month. Economists had pencilled in a reading of 51.1.
The data came as investors speculated on when the Federal Reserve will begin tapering stimulus. Many economists don't expect the Fed to begin scaling back its quantitative easing until March 2014 but some took the central bank's statement this week to mean it could begin by as early as December even.
The President of the Federal Reserve bank of Philaldelphia, Charles Plosser, today indicated that he is worried about the eventual exit of the central bank from quantitative easing. He argued in favour of setting a limit on the size which the Fed´s balance sheet is allowed to reach.
His peer, President of the Federal Reserve bank of St. Louis, James Bullard, suggested today that the Fed wants to see further improvement in the labour market before tapering.
In China, manufacturing activity rose to the highest level in 18 months. The PMI increased to 51.4 in October from 51.1 a month earlier, the National Bureau of Statistics and China Federation of Logistics and Purchasing revealed. It beat analysts' estimates for a reading of 51.2.
However, the news gave investors some cause for concern because although it climbed, there was in fact a significant gap between big and small manufacturers, with the smaller companies experiencing a contraction in the four-week period.
Euro falls on interest rate cut speculation
The euro fell, heading for its biggest weekly decline against the dollar
since February, on speculation that slowing inflation will prompt the European Central Bank to cut interest rates.
The ECB may cut rates next week after data yesterday showed region's inflation plunged to an unexpected 0.7% in October, a four year low, according to Bank of America , UBS and Royal Bank of Scotland.
The euro was down 0.71% to $1.3488.
Italy's Letta sees government lasting until 2015
Italian Prime Minister Enrico Letta has said his government could last until 2015 despite instability within the coalition.
"We won a very complex battle: from October 2nd we have more strength and I am looking to the future with confidence," Letta told daily La Stampa.
His remarks come ahead of a Senate vote this month on whether to expel Silvio Berlusconi from parliament following a conviction for tax fraud.
In other European news, almost half of British businesses think the cost of complying with single-market regulation outweighs the benefits of being inside the European Union (EU), according to a YouGov poll.
Barclays slumped following news it suspended six traders following an internal investigation into manipulating the foreign exchange
Royal Bank of Scotland fell after reporting a third-quarter loss and saying it expects a "substantial" group loss for the full year. The company also announced it would create an internal bad bank where it will put its toxic loans which analysts at Investec said would trigger £4-4.5bn of "accelerated and increased" impairments.
Vodafone jumped in the wake of a report that AT&T executives are in talks for a potential takeover of the telecoms business.
Meggitt declined after the provider of wheels and brakes for military aircraft cut its full-year sales forecast due to production issues.
Pandora advanced after the Danish jeweller raised its full-year sales forecast to 8.6bn kroner.
Renault fell after Nissan downgraded its guidance for net income of 355bn yen in the year ending March 31st, compared with its previous estimate of 420bn yen.
ASM International, the society for materials scientists and engineers, rallied as it reported third-quarter sales that beat forecasts.
Brent crude futures fell $1.615 to $107.110 per barrel on the ICE.