China data hits Europe shares, Crimea keeps nerves taut

Mon Mar 24, 2014 5:36am EDT
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By Nigel Stephenson

LONDON (Reuters) - European shares edged lower on Monday after further signs of a slowdown in China, although robust data from France and Germany limited their decline.

The euro briefly strengthened against the dollar and German Bund futures extended losses after data compiler Markit said its March flash composite purchasing managers' index for France jumped to 51.6 from 47.9 last month.

However, the single currency largely gave up its gains after figures showed private sector growth slowed in Germany. Data from the euro zone as a whole, while suggesting the recovery was becoming more broad-based, dipped compared with February.

Having lagged the recent recovery in much of the euro zone, the French index surged through the 50-point threshold dividing contraction from expansion to hit its highest since August 2011.

However, the data was not enough to lift European shares. The FTSEurofirst 300 index .FTEU3 fell 0.2 percent as investors focused on a fall in Chinese business activity.

The flash Markit/HSBC China Purchasing Manager index fell to an eight-month low of 48.1 in March from February's 48.5. The index has been below 50 since January.

"As the data shows this morning, China's slowdown is sharper than what most people had expected, which fuels worries about the impact on global growth," Philippe de Vandiere, analyst at Altedia Investment Consulting in Paris, said.

"But Chinese authorities have plenty of tools to avoid a hard landing, and we know that the country's transition to an economic model more focused on consumer spending will lower its growth rate a bit, so no big concern here."   Continued...

A man walks past the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth