Europe close: Stocks shrug off slowdown worries to edge higher in data-free session

European equities edged higher on Tuesday, shrugging off fresh bad news from China and some hawkish comments from a top European Central Bank (ECB) official.

The benchmark Stoxx Europe 600 index closed up 0.10%, while Germany’s DAX rose 0.16% and France’s CAC 40 gained 0.02%.

As of 1636 GMT, the euro was on the back foot against the main currencies, sliding 0.55% and 0.48% against the pound and the yen respectively and falling to a six-month low against the dollar, while Brent crude gained 0.92% to $47.63 a barrel.

China woes intensify

On a quiet day on the economic front on both sides of the Atlantic, investors received more bad news from China, with figures released by the National Bureau of Statistics earlier showed Chinese consumer prices rose only 1.3% in the year to October.

This was down from 1.6% in September, marked the lowest reading since May and fell short of expectations of 1.5%.

“Unless and until China data begins to pick up, those companies whose performance is heavily skewed towards Chinese demand will find the going tough,” said IG’s senior market analyst Chris Beauchamp.

“With the US earnings season winding down and markets still adjusting to the increased possibility of a December rate hike, we may well see equities struggle for the time being, with the gains of October continuing to be unwound.”

Miners, which are heavily dependent on demand from China, were under the cosh after the release of data from Beijing.

A downgrade of the European mining sector to ‘neutral’ from ‘positive’ did little to lift the mood, as Barclays pointed out that the last five years have marked the worst performance since 1966.

“A demand shock seems unlikely given the state of China’s economy, although there are some signs of near term improvement,” the bank said.

ECB Weidmann issues low-interest rates warning

Meanwhile, ECB member and Bundesbank president Jens Weidmann dampened sentiment further after talking up the risks that ultra-low interest rates could present for financial stability.

"Monetary policy bears responsibility for risks to financial stability if they affect the long-run outlook of price stability or our capacity to ensure price stability in the future," he said.

"In that sense I share concerns about monetary policy that's too loose for too long."

In company news, Vallourec slumped 10.2% after the French steel pipe maker posted a third quarter loss amid falling demand from its oil and gas customers and said it does not expect market conditions to improve any time soon.

Swedish carmaker Volvo declined 1.03%, despite receiving a favourable arbitration ruling, which is expected to boost fourth quarter operating profit by approximately 800m Swedish kronor (£61m).

Dutch electronics group Philips slid 0.34% after announcing it has signed a €225m (£159m) deal with Canada-based Mackenzie Health to install and run medical technologies at in two hospitals in Ontario.