Europe close: Shares end lower as China, EZ PMI readings dent sentiment

The benchmark Stoxx 600 ended down 0.7% on the day. China's services activity expanded at the slowest pace in five months in June, the Caixin a private-sector survey showed, as weakening demand dragged on the post-pandemic recovery. The news hit Asian shares with Hong Kong down 1.5% and Shanghai 0.68%.

Eurozone manufacturing output fell in June, while services growth also weakened, according to final survey data released on Wednesday.

Manufacturing output slumped to 44.2 from May’s 46.4 and below the flash estimate of 44.6 on weaker demand, which offset falling input costs.

The S&P HCOB headline services index was revised down, to 52.0, from its advance estimate of 52.4, leaving it at a five-month low. The composite PMI Output Index fell to 49.9, compared with May's 52.8), a 6-month low and below the 50 level that marks contraction from expansion.

"The eurozone economy ground to a halt at the end of the second quarter, ending a robust sequence of services-led growth seen since the beginning of the year. While services business activity growth continued, it slowed to a five-month low in June," S&P said.

Elsewhere in China, tensions with the US over export controls on metals used in making semiconductors were ratcheted up a notch as a trade policy adviser said the move was "just a start”, days before US Treasury Secretary Janet Yellen visits Beijing.

‘’There are fresh concerns about the global economy powering down as data from China’s service sector underlines how tepid the post-pandemic recovery has become, just as trade tensions between Beijing and Washington ramp up. This has put indices in Europe on the back foot, following falls in Asia,” said Hargreaves Lansdown analyst Susannah Streeter.

In equity news, cash-strapped French retailer Casino said Czech billionaire Daniel Kretinsky is leading a €1.35bn rescue plan, which could satisfy the chain's target of raising €900m in new equity.

Shares of Adyen dipped after UBS cut its rating for the Dutch online payments firm to neutral from buy.

Ams-Osram, the German maker of electric lights, fell more than 13%. Swiss business news agency Awp reported that market observers had suggested nerves over the impact of new Chinese metals export restrictions may be at play.

German drug developer Evotec gained after securing a $74m contract with the US Department of Defense.

Reporting by Frank Prenesti for Sharecast.com