- Eurozone Composite PMI
- China's services industry hits new high
- Italy's economy threatens Eurozone, says economist
FTSE 100: 0.25%
CAC 40: -0.23%
FTSE MIB: 0.12%
IBEX 35: -0.02%
Stoxx 600: 0.05%
European stocks were mixed on Thursday before the release of manufacturing and services data in the euro-area and after a report showed China's services sector expanded at the fastest rate in six months.
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 purchasing managers' index (PMI) for September jumped to 55.4, up from the prior month's reading of 53.9 and over the 50 reading that signals expansion.
In Europe, the PMI Composite, which includes manufacturing and services, is expected to show a reading of 52.1 in September, unchanged from August, according to consensus.
The data comes a day after European Central Bank President Mario Draghi said Europe was recovering albeit at a slow pace.
His remarks followed an announcement by the central bank to keep its benchmark interest rate unchanged at 0.5% until it sees further signs of recovery in the Eurozone.
In the UK, services PMI came in at 60.5 in September, in line with the previous month's reading, economists predict.
In the US, there will be no data releases as the government shutdown enters its third day.
The Bureau of Labor Statistics (BLS) warned on its website that "the BLS will not collect data, issue reports, or respond to public inquiries. Updates to the site will start again when the Federal government resumes operations. Revised schedules will be issued as they become available".
The government began a partial shutdown on Tuesday after failing to reach an agreement on the budget by the Monday midnight deadline.
The stalemate comes from 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 Republicans are continuing to push for a delay in the introduction of Obamacare, while Obama is refusing to negotiate on the matter," said Craig Erlam, Market Analyst at Alpari.
"Neither party is easing up on their stance making a deal in the coming days unlikely. Realistically, a deal on the budget is likely to be included in the deal on the debt ceiling, which could yet take a couple more weeks and knock up to 1% of fourth quarter annualised gross domestic product."
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.
Obama met with Congressional leaders on Wednesday before confirming that he will not negotiate with the Republicans on the debt ceiling and that Wall Street "should be concerned".
"Clearly markets took these comments with a pinch of salt, with them instead viewing them as scaremongering from the President in an attempt to pile the pressure on the opposition to raise the debt ceiling with no conditions attached," Erlam added.
Italy's struggle not over yet, 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."
easyJet gains after raising guidance
easyJet soared after lifting its full-year profit guidance following a strong second half.
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.
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.