Europe open: Shares edge lower as investors await PMI data, mull China rating cut

European shares edged lower on Tuesday as investors awaited eurozone and US business activity data and digested a cut in China's credit rating to 'negative' from 'stable' by Moody's.

The pan-European Stoxx 600 index was down 0.05% in early deals with major regional bourses mixed. Britain’s FTSE 100 was down 0.41% after Qatar Holding cut its stake in Barclays Bank.

The UK mood was also tempered by data showing consumers remained cautious despite the increasing number of Black Friday deals ahead of the Christmas period.

Like for like sales in November rose 2.6%, unchanged from the previous month, with sales of high value goods remaining soft, with consumers preferring to go with lower ticket and essential items spend of food and drink, health and personal care.

On the China front, Moody's said its cut reflected the risks related to its persistently lower medium-term economic growth and ongoing downsizing of the property sector.

It expects China’s annual GDP to come in at 4% in 2024 and 2025 and average 3.8% between 2026 and 2030. Predictably, China’s finance ministry said it was disappointed by the downgrade and called Moody’s concerns "unnecessary".

"China has struggled with a bumpier than expected post covid recovery. It has been grappling with weak demand, an embattled property sector, declining imports and exports, and heavy debts from long-term infrastructure spending," said Interactive Investor analyst Victoria Scholar.

"The government has stopped publishing youth unemployment figures, after they hit a record high in the summer. While the authorities have been attempting to bolster demand through stimulus measures, more needs to be done to support the world’s second largest economy particularly amid the backdrop of sluggish global demand.”

In equity news, shares in Barclays fell after Qatar Holding moved to sell around £510m in stock.

Telecom stocks were in focus, with Ericsson up 9% after striking a deal with AT&T to build a major telecom network using ORAN technology, while Nokia plunged 9.7% on losing more supplier work to Ericsson.

Reporting by Frank Prenesti for Sharecast.com