Europe midday: China data, German ZEW hit sentiment

European markets opened slipped into the red on Tuesday as weaker-than-expected China data and downbeat consumer sentiment in German hit trade.

The pan-European Stoxx 600 index edged up 0.07% in early deals with all bourses clinging on to positive territory. Data from China show retail sales and industrial production both missed forecasts.

“China’s pandemic snap back is losing elasticity, adding to worries about growth unravelling across the global economy,” said Hargreaves Lansdown analyst Susannah Streeter.

“Concerns are also rising that not enough progress is being made to avoid a US default, which would send shockwaves through financial markets.”

“As the clock ticks down, volatility on markets is expected to tick up. The S&P 500 ended up in positive territory but weakness is set to pervade trading today amid nervousness about the precarious budget situation.”

In the UK the unemployment rate rose to 3.9% in the three months to March from 3.8% a month earlier, versus expectations for it to be unchanged. The increase was largely driven by people unemployed for over 12 months.

German business sentiment deteriorated much more than expected in May as worries about rate hikes and the US debt ceiling took their toll, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim.

The headline ZEW investor expectations index tumbled to -10.7 from 4.1 in April, coming in below consensus expectations of -5.1.

On the equities front, Vodafone shares dropped 6% after it cut a record 11,000 jobs. Chief Executive Officer Margherita Della Valle said the telecom giant “must change” as annual profits fell.

Swiss hearing aids maker Sonova slumped after reporting full-year core profit below market expectations, citing initial dilution from recent acquisitions and input cost challenges.

Reporting by Frank Prenesti for Sharecast.com