- Eurozone and UK services PMIs fall
- ECB members mixed on deflation risks
- US services and ADP jobs reports out later
FTSE 100: 0.30%
CAC 40: 0.26%
FTSE MIB: 0.40%
IBEX 35: 0.27%
Stoxx 600: 0.26%
European stocks were little changed as investors weighed weaker-than expected services data in the UK and the Eurozone.
The purchasing managers' index (PMI) for the Eurozone service industry fell to 51.6 in January from 51 a month earlier. It missed analysts' expectations of 51.9 but was still above the 50 level that signals expansion.
In the UK, the PMI for services declined to 58.3 in January from 58.8 in December, compared to the forecast of 59.
"Although the UK CIPS/Markit services survey weakened again in January, it still suggests that the economic recovery has plenty of pace," according to Capital Economics.
"Accordingly, we expect GDP to grow by a healthy 3% or so this year."
Another report showed Eurozone retail sales dropped 1% in December, compared to a rise of 1.3% in November. Economists had pencilled in an increase of 1.5%.
The data comes a day ahead of the European Central Bank's (ECB) policy meeting. While analyst see no change to policy tomorrow, the ECB is coming under mounting pressure to take greater measures to tackle falling inflation and the stagnant recovery.
ECB members are apparently showing varying degrees of concern about the threat of deflation in the Eurozone that could alter its current monetary policy stance.
Several market media sources are quoting "MNI sources" as saying that there are "varying degrees of concern over inflation" and that there is no clear consensus. Inflation is currently at 0.7%, well below the ECB's 2% target.
US services, jobs data
In the US, the ISM non-manufacturing composite will be released this afternoon along with weekly mortgage application figures and the ADP Employment report.
The non-manufacturing index is expected to have risen to 53.7 in January from 53 in December, according to economists.
The ADP report is anticipated to show companies hired 185,000 employees in January, slower than the 238,000 gain a month earlier.
The Federal Reserve has continued to monitor the labour market after deciding to begin scaling back monetary easing in December.
RSA Insurance Group edged up after brokers including Barclays and Raymond James Financial upgraded their ratings on the UK insurer following the appointment of former Royal Bank of Scotland Chief Executive Officer Stephen Hester.
Swatch Group rallied after reporting full-year profit that beat analysts' estimates.
Hargreaves Lansdown slumped after saying its operating margins fell in the first half.
Alfa Laval gained after posting fourth-quarter order intake that exceeded estimates.
Panasonic advanced after the consumer electronics firm posted third-quarter profit that surpassed the consensus forecast.
The euro fell 0.01% to $1.3517.
Brent crude futures rose $0.113 to $105.900 per barrel, according to the ICE.