Europe close: Stocks finish lower on jitters ahead of central bank decisions

Germany’s DAX fell 1.30% to 10,526.16 points, France's CAC 40 dropped 0.86% to 4,470.28 points, Italy's FTSE MIB shed 1.32% to 16,898.28 points and Spain's IBEX 35 dipped 1.12% to 9,040.70 points.

Investors were likely to be cautious ahead of rate decisions from the Federal Reserve and the Bank of England on Wednesday and Thursday, respectively.

Earlier, both the Bank of Japan and the Reserve Bank of Australia stood pat on their monetary policies.

IG’s Joshua Mahony said: “Overnight announcements from the BoJ and RBA saw two of the four central bank decisions this week err on the side of caution. In much the same way as we expect the Fed to remain steady on rates, with the election uncertainty looming, the same story goes for everyone else, with the outcome sure to significantly alter the state of play for currencies, bonds, commodities and stock valuations.”

On the economic data front, China’s official manufacturing purchasing managers’ index increased to 51.2 in October from 50.4 the month before. A reading above 50 indicates expansion.

The Caixin manufacturing PMI edged up to 51.2 in October from 50.1 in September. Both readings beat forecasts.

In the UK, the Markit/CIPS manufacturing PMI fell to 54.3 from 55.5 in September, missing expectations for a reading of 54.5. Still, it remained well above its long-run average of 51.5.

In the US, Markit’s final manufacturing PMI came in at 53.4 in October, up from an initial reading 53.2 and 51.5 in September.

The ISM's headline manufacturing index rose to 51.9 from 51.5 in September, beating forecasts for a reading of 51.7.

In contrast, US construction spending declined 0.4% in September on the month to a seasonally-adjusted $1.15bn, according to the latest figures from the Commerce Department. It missed economists’ expectations for a 0.5% increase.

Meanwhile, oil prices edged higher on a weaker dollar, with Brent crude up 0.20% to $48.71 per barrel and West Texas Intermediate up 0.02% to $46.87 per barrel at 1607 GMT.

On the corporate front, the energy sector was in focus as oil giants BP and Shell reported their earnings.

BP was under the cosh after it said underlying third-quarter profits halved compared to last year, although the fall was not as bad as feared.

However, Royal Dutch Shell fared a lot better, racking up solid gains as its third-quarter profits beat analysts’ expectations.

Tyre maker Nokian rallied after posting a 2% rise in third-quarter operating profit while consumer goods group Orkla was also in the black after reporting better-than-expected core operating profit for the third quarter.

Moneysupermarket surged as it said it was on track to meet forecasts for a record year after a resurge in insurance offset a flat period for credit card and loan switching in the third quarter.

Asia-focused Standard Chartered slumped after the bank swung to a third-quarter profit, but the numbers missed analysts’ expectations. In the quarter ended 30 September, underlying pre-tax profit came in at $458m from a $139m loss in the same period a year ago, but it was below the $520m analysts had pencilled in.

Danish jewellery brand Pandora was on the back foot despite reiterating its full-year revenue guidance and reporting an increase in third-quarter profit.