- US government shutdown enters day three
- Eurozone PMI Composite grows
- Chinese service activity hits six month high
- Italy's struggle far from over, says economist
FTSE 100: 0.20%
CAC 40: -0.39%
FTSE MIB: -0.08%
IBEX 35: -0.61%
Stoxx 600: -0.02%
European equities were little changed as the US government shutdown entered its third day and as Eurozone purchasing mangers' index (PMI) data beat expectations.
The US government is into its third day of a partial shutdown after failing to reach an agreement on the budget by the Monday midnight deadline.
The stalemate came following a disagreement over passing President Barack Obama's controversial healthcare bill.
Some economists predict it could take up to two weeks of political infighting between the Republicans and Democrats over next year's budget and the debt ceiling.
"The general consensus in the markets continues to be that a last minute deal between the Democrats and the Republicans will be struck before the debt ceiling deadline," said Craig Erlam, Market Analyst at Alpari.
"That said, investors are clearly concerned by how far away both parties are on a deal. US President Barack Obama is refusing to offer any concessions in relation to Obamacare, while the Republicans are insisting on it. With neither side budging, there is a chance that no deal will be agreed, and the closer we get to the deadline, the more negativity we'll see in the markets."
The government reached its $16.7trn debt ceiling in May and since then has been using emergency measures to conserve cash. Treasury will have about $30bn in cash on hand by October 17th.
Eurozone and Chinese PMIs signal growth
Markit's Eurozone Composite PMI, a measure of services and manufacturing growth, rose to 52.2 in September from 52.1 in August, beating forecasts for a reading of 52.1 and the 50 level that signals expansion.
The data comes a day after European Central Bank President Mario Draghi said Europe was recovering albeit at a slow pace and the monetary authority announced its decision to keep its benchmark interest rate unchanged at 0.5%.
Separate PMI data showed activity in China's services industry grew at the fastest rate in six months as government stimulus efforts continued to support growth in the world's second-largest economy.
The Chinese services PMI for September jumped to 55.4, up from the prior month's reading of 53.9.
In the UK, services PMI fell to 60.3 in September from 60.5 in August, falling short of analysts' expectations for a reading of 60.5.
Italian economy in trouble, says economist
Italian Prime Minister Enrico Letta may have won the battle to keep his government together on Wednesday but he faces a bigger struggle to revive the country's stale economy that threatens to weigh on the rest of the Eurozone.
Letta yesterday won a confidence vote in parliament after centre-right leader Silvio Berlusconi made last minute U-turn and abandoned his bid to bring down the leading coalition party.
Berlusconi had over the weekend ordered the resignation of ministers from his People of Freedom party in the coalition but back down after senators refused to support his move.
"The Letta government has to make some unpopular choices," Tito Boeri, an economist with Bocconi University in Milan, told The Wall Street Journal. "But with such a complex political situation, it becomes even harder. Letta had zero probability of passing strong reforms before. Now it is probably slightly more positive, but it is still very difficult."
Aviva rallied after the insurer said it received $2.6bn from the sale of its US life-insurance and annuities business to Apollo Global Management.
Gerresheimer slumped after Credit Suisse downgraded the producer of pharmaceutical and health-care equipment to 'neutral' from 'outperform'.
BP advanced after a US appeals court halted some payments related to claims against the company over the Gulf of Mexico oil spill in 2010.
Unicredit jumped after the Italian bank said it offered to buy Rabobank Groep's Polish unit Bank Gospodarki Zywnosciowej.
Sports Direct International declined following reports Chief Executive Dave Forsey and Finance Director Bob Mellors each netted 6.4m pounds after selling shares
from a bonus plan.
Other asset classes rise
The euro rose 0.16% to the 1.3601 US dollar.
Brent crude futures were up $0.128 to $109.330 per barrel on the ICE.