Europe midday: Stocks in the red after uninspiring manufacturing data

European stocks fell on Monday as investors digested uninspiring manufacturing figures from the Eurozone and China.

At midday, the benchmark Stoxx 600 index was down 0.1%, while Germany’s DAX and France’s CAC 40 were both off 0.5%.

Manufacturing data out of China came in softer than expected. The official purchasing managers’ index came in at 49.4 in January from 49.7 the previous month.

This was below the 50 mark that separates contraction from expansion, missing economists’ expectations for a reading of 49.6 and marking the weakest reading since August 2012.

Meanwhile, the Caixin survey, which tracks smaller firms than the official figures, rose to 48.4 in January from 48.2 in December. This was better than expected but still in contraction.

The official non-manufacturing PMI slipped to 53.5 in January from 54.4 in December, according to the National Bureau of Statistics. Although the reading was weaker on the month, it managed to hold firm in expansion territory.

Rebecca O’Keeffe, head of investment at Interactive Investor, said: “Chinese manufacturing PMI fell for the sixth consecutive month, reaching a three year low and causing increasing concern on the state of the Chinese economy. The worse-than-expected results have temporarily halted the commodity rally, but investors are still banking on Chinese policymakers to pull out all the stops and provide momentum for growth.”

Meanwhile, Eurozone data showed growth in the bloc’s manufacturing sector slowed at the start of January.

The final Markit manufacturing Purchasing Managers’ Index for January came in at 52.3, in line with the flash estimate and down from 53.2 in December.

Markit said rates of expansion in output, new orders and new export business all eased during the month.

“Worries about the global economy, volatile markets and the appreciation of the EUR in recent months look to have outweighed the boost from the lower cost of oil,” said BNP Paribas.

“Against a backdrop of lower business confidence indicators indicating some downside risks to growth and price indices signalling downward pressures on inflation, we expect the ECB to ease monetary policy further as soon as its March meeting,” it added.

Oil prices were mixed as investors digested the soft Chinese data and amid fading hopes that key producers will cut production. West Texas Intermediate was down 1% at $33.28 a barrel and Brent crude was flat at $36.00.

On the corporate front, BT Group was in the black after posting a rise in third quarter revenues and unveiling a new restructuring.

Ryanair flew higher after reporting a jump in third quarter profit as traffic grew strongly and the budget airline announced a €800m share buyback programme.

Bankia surged after the Spanish bank’s fourth quarter profit beat expectations.

On the downside, Nokia and Alcatel shares tumbled after Nokia settled a patent dispute with Samsung.

Elsewhere, Rolls-Royce was a touch weaker despite announcing a $2.7bn order from Norwegian Air.