Europe midday: Shares extend losses as auto sector tumbles on Stellantis warning

European shares extended morning losses by midday as weak manufacturing survey data in China offset a surge in the Beijing stock market after more attempts to prop up the country’s troubles property sector, while increased tensions after Israel's continued bombing of Lebanon also hit sentiment.

The pan-regional Stoxx 600 index was down 0.88% to 523.34 after setting fresh records last week. Israel last week killed Hezbollah leader Hassan Nasrallah in an air strike, which also killed 20 senior militia figures.

The death toll in Lebanon has rise to more than 1,000 in the last two weeks as Israel escalates the conflict and ignores global calls for a ceasefire.

Manufacturing activity in China was still in the doldrums in September as demand for new orders fell, according to official and private surveys published on Monday.

The National Bureau of Statistics (NBS) purchasing managers' index (PMI) edged up to 49.8 in September from 49.1 the previous month, but still below the 50-mark which separates growth from contraction. Forecasts had been for a print of 49.5 in a Reuters poll.

However, in the private Caixin survey, which covers smaller enterprises, the manufacturing PMI slumped to 49.3 in September from 50.4 in August, worse than the 50.5 expected by analysts and the lowest since July 2023.

The NBS non-manufacturing PMI dropped to 50.0 in September versus August’s 50.3 figure and estimates of 50.4.

In Italy, inflation sank below 1% as consumer prices rose just 0.8% in September on an annual basis and from 1.2% in August, according to official data. The country's statistics institute cited lower energy, transport and communication costs.

"European inflation data provides the central focus for traders this morning, with the Italian metric falling in a continuation of the disinflation theme that saw Spanish and French CPI tumble on Friday," said Scope Markets analyst Joshua Mahony.

"With a raft of German regions having all seen similar weakening in their annual inflation metrics, we can look ahead to tomorrows eurozone CPI release with confidence that we will likely see a significant decline that should see a move back below the 2% target."

In the UK, figures released earlier by the Office for National Statistics showed that the economy grew less than initially thought in the second quarter of the year.

GDP grew 0.5% in the three months to June, down from a previous estimate of 0.6% growth.

On the equities front, automaker shares fell after Stellantis issued a profit warning on the back of weaker sales forecasts. Porsche, Renault, Volvo and Volkswagen were all down as Stellantis tanked by 15%, and parts supplier Forvia by more than 10%.

Shares in UK property portal Rightmove sank as the company rejected a third offer from Rupert Murdoch's REA Group worth £6.2bn.

Reporting by Frank Prenesti for Sharecast.com