Europe midday: Equity markets slip after disappointing GDP data

European stocks fell into the red after data showed growth in the Eurozone unexpectedly slowed in the third quarter and as investors mulled the possibility of a US rate hike next month.

At midday, the benchmark Stoxx Europe 600 index was down 1.2%, Germany’s DAX was 1% weaker and France’s CAC 40 was off 1.1%.

Figures released by Eurostat showed gross domestic product in the Eurozone grew 0.3% month-on-month in the third quarter compared with a 0.4% gain in the previous three months and missing analysts’ expectations for an unchanged reading.

On a year-on-year basis, GDP grew 1.6%, slightly better than the 1.5% gain posted in the previous quarter but short of the expected 1.7% figure.

“The euro area’s pace of economic growth lost a little momentum in the third quarter, despite the additional central bank stimulus seen so far this year and a weakened, competitive, currency,” said Chris Williamson, chief economist at Markit.

“The subdued pace of growth and persistent weak inflation applies further pressure on the ECB and increases the likelihood of the further measures being announced in December.”

As well as concerns about slowing growth, investors were weighing up the possibility of a rate hike by the Federal Reserve following comments from a number of Fed speakers on Thursday.

Deutsche Bank strategist Jim Reid said: “Central bankers continue to be the main drivers on both sides of the Atlantic.

“In the US all three Fed speakers yesterday gave indications that the Fed are ready to hike with caveats about the pace of hikes. Even the usually dovish Dudley suggested the conditions for a monetary policy normalisation could soon be satisfied and the risks of acting too soon and waiting too long as nearly balanced. Bullard and Evans did not provide much opposition to that even though Evans suggested that increases should be gradual.”

On the corporate front, aerospace and engineering firm Rolls-Royce suffered losses for a second day running – albeit much less severe – after it said on Thursday that earnings for the year will be at the low end of guidance as it downgraded its expectations for next year and warned of a possible dividend cut.

Roche was under pressure after the Swiss drug maker said it will stop manufacturing at four sites in Europe and the US, putting up to 1,200 jobs at risk.

On the upside, shares in Syngenta surged following media reports the agricultural company was offered $42bn in a takeover offer by ChemChina. Bloomberg later reported that Syngenta had rejected the offer.

French telecommunications company Bouygues rallied after posting a rise in third quarter operating profit and confirming its 2015 targets.

As investors scramble to gauge the timing of the next Fed rate hike, attention will shift to the release of US retail sales figures at 1330 GMT. PPI is also scheduled for that time, while business inventories and University of Michigan consumer confidence are at 1500 GMT.