Europe close: Equities under pressure amid disappointing data from Germany and China

European stocks were firmly in the red on Tuesday, as negative data from Germany and China weighed on sentiment.

The benchmark Stoxx Europe 600 index closed down 0.93%, while Germany’s DAX fell 0.86% and France’s CAC 40 was 0.97% lower.

As of 1647 BST, the euro was broadly flat against the yen but gained 0.25% and 0.87% against the dollar and the pound respectively, while Brent crude edged 0.04% higher to $49.88 a barrel.

German data disappoints

German data set the negative mood, as it showed investor confidence fell to its weakest level in a year.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations declined from 12.1 in September to 1.9 in October, marking the seventh consecutive decline and falling short of the 6.5 reading analysts expected.

Germany has endured a turbulent couple of weeks, with the Volkswagen emission scandal wiping 3.5% off the country’s benchmark index in the two days after the car maker admitted fixing emission tests for over 11m vehicles.

ZEW’s gauge for current conditions in Germany fell from 67.5 to 55.2 in October, while the sub-index tracking business expectations in the Eurozone declined from 33.3 to 30.1.

“In all, today’s survey supports our view that German growth is likely to slow in the coming months and we expect a gain of around 1.5% this year to be followed by a slowdown to 1.2% next year,” said analysts at Capital Economics.

Meanwhile, consumer prices in the Eurozone's largest economy remained flat as initially estimated in September, while wholesale prices continued to decline.

According to Destatis, the country’s statistical office, consumer price inflation declined from 0.2% in August to zero in September, in line with the provisional results published on 29 September.

On a monthly basis, consumer prices declined 0.2% in September compared with a flat rate of growth in the previous month.

Elsewhere, there was negative news from China, where dollar-denominated exports dropped 3.7% in September from a year earlier, while imports fell 20.4%, marking their eleventh consecutive month of decline.

Exports were better than expected but imports were weaker, raising doubts over domestic demand.

“Markets have grown used to underperforming Chinese data and thus today's data was no surprise,” said IG’s market analyst Joshua Mahony.

“However, it did show the path continues to be one of deterioration and a recovery seems out of sight for now.”

In company news, luxury goods group LVMH slid following a mixed set of third-quarter results.

Volkswagen was also on the back foot after saying it will cut investment by €1bn a year and accelerate its cost-cutting programme as it makes changes to the diesel technology used in its cars in the wake of the emissions scandal.

Credit Suisse and UBS were under the cosh, following reports that Switzerland’s finance ministry will require the country’s biggest banks to have capital equal to around 5% of their total assets.

On a more positive note, SABMiller shares shot higher after an agreement in principle to a possible £44 per share takeover offer from Anheuser-Busch InBev.