Europe open: Stocks slide as weak China PMI data hits sentiment

European shares opened sharply lower on Wednesday as signs that China's economy was faltering hit sentiment and the ongoing US debt ceiling saga also weighed on investors minds.

The pan-European Stoxx 600 index was down 0.87% in early deals with all major regional bourses lower.

Further signs that China's economic recover was stuttering emerged on Wednesday as data showed factory activity falling faster than expected, driven by weaker demand.

The official manufacturing purchasing managers' index (PMI) fell to a five-month low of 48.8, the National Bureau of Statistics (NBS) said on Wednesday, down from 49.2 in April and missing forecasts for an increase to 49.4.

A mark below 50 indicates contraction. The non-manufacturing gauge fell to 54.5 from 56.4, while the new-orders sub-index fell to 48.3 in May from 48.8 in April, and the new-export-orders sub-index fell to 47.2 from 47.6.

"Growth slowdown fears have accelerated as the latest data from China shows a faltering recovery, knocking back sentiment on markets. Far from being the powerhouse which will offset America’s slowdown, China’s economic recovery from the pandemic is looking more precarious," said Hargreaves Lansdown analyst Susannah Streeter.

"A cloudy geo-political landscape is also causing concern, amid ongoing chip wars and sanctions, after it emerged that China turned down a US request for their defence chiefs to meet on the sidelines of a summit in Singapore."

"Worries are also lingering about the obstacles still in the path of the US budget legislation aimed at raising the debt ceiling, with harder line Republicans still strident in their opposition."

B&M Value Retail shares gained as the chain said it expected current adjusted core earnings to be higher, despite posting a fall in annual profits.

WH Smith shares were also higher after the retailer said on Wednesday that its expectations for the full year had improved "modestly" as it hailed continued strong momentum across its global travel business.

Reporting by Frank Prenesti for Sharecast.com