Europe close: Stocks slump amid weak US data, oil price drop, ECB doubts

European stocks wavered amid unexpectedly weak economic data out of the States that sent the single currency higher and weakness in energy prices.

The benchmark Stoxx Europe 600 index slipped 0.33% or 1.16 points to finish at 349.46 and France’s CAC 40 was 0.24% weaker, but Germany’s DAX closed up by 0.14%.

Worth noting, there was also a fair amount of 'market-chatter' surrounding the possibility that the European Central Bank might not deliver on some observers' expectations for further easing.

Oil prices extended a late slide from the previous session after Saudi Arabia and Russia agreed to "co-operate" in the energy sphere but with no firm agreement to freeze output - as some observers had expected - forthcoming.

West Texas Intermediate was down 1.8% at $44.38 a barrel and Brent crude was off 1.67% to $46.85.

Nonetheless, on Tuesday, Reuters cited Seyed Mohsen Ghamsari, director for international affairs at the National Iranian Oil Company, as having said that Iran would be ready to negotiate its level of production as soon as production recovers to its pre-sanction volumes.

The ISM´s US service sector gauge hit a six-year low in August, falling from 55.5 in the month before to 51.4 (consensus: 55.0).

Analysts were left a bit befuddled by the survey results, which appeared to be sharply at odds with the hard data. Ian Shepherdson, chief economist at Pantheon Macroeconomics, for one, put the weak reading down to a statistical fluke.

For his part, Paul Ashworth, his equal number at Capital Economics, told clients: "This makes us very nervous for the third quarter since the same scenario is playing out. Admittedly, growth might still be accelerating. There are good reasons to believe it will, such as the rebound in mining-related investment and the strength of exports.

"Nevertheless, even if this simply introduces some uncertainty about whether GDP growth really is undergoing a rebound, that should be enough to persuade Fed officials that it would make more sense to delay a rate hike until after the third-quarter GDP figures are released in late October."

On the corporate front, Fresenius gained after the healthcare provider said it will buy Spain’s largest private hospital company, Quironsalud, for $6.42bn.

Berkeley Group racked up healthy gains as the housebuilder and property developer said the market had returned to pre-Brexit levels in August following a hiatus either side of the EU referendum.

Low-cost carrier EasyJet flew higher after saying passenger numbers grew 6.4% in August from the same month last year to 7.51m, while the load factor edged up to 94.9% from 94.4%.

On the downside, Bayer nudged lower after the German chemical company sweetened its bid for US-based Monsanto to $127.50 per share from $125 in July.

Syngenta was a touch weaker after ChemChina said it has extended the offer to buy the Swiss seeds company for $43bn to 8 November.

Dutch financial services company Aegon was also in the red after saying chief financial officer Darryl Button is stepping down from the role.

Shares in French payments processor Ingenico tumbled after it downgraded its sales and profit forecasts for the year.

In macroeconomic news, Eurozone gross domestic product growth for the second quarter was confirmed at 0.3%, according to data released by Eurostat.

Seasonally-adjusted GDP was up 0.3% in the bloc compared to the previous quarter and 1.6% from the second quarter of last year. In the first three months of the year, eurozone growth came in at 0.5%.

Figures out earlier from Destatis showed new manufacturing orders in Germany rose less than expected in July.

Orders were up 0.2% on the month following a 0.3% decline in June. Economists had been expecting a 0.5% jump.