Europe Open: Weak China Data, Stronger Euro Exert Drag On Shares

European stocks are trading sightly lower with weaker-than-forecast Chinese economic data again a key factor together with strength in the euro following a bumper report on German growth in the third quarter.

As of 1030 GMT, the benchmark Stoxx 600 was 0.23% or 0.90 points lower at 385.23, alongside a 0.03% or 3.36 point dip for the German Dax to 13,069.75 while the Cac-40 was slipping 0.02% or 1.03 points to 5,340.60.

Just as on Monday, stocks in the Basic Resources space were again the weak link in the chain in the wake of the latest round of Chinese numbers, which showed industrial production and retail sales both slowing by more than had been anticipated.

The Stoxx 600's sub-index for Basic Resources was 1.34% lower to 442.14.

In parallel, euro-dollar was moving higher by 0.47% to 1.1718.

Commenting on the price action in markets, Michael Hewson, chief market analyst at CMC Markets UK said: "Having seen sharp falls last week, the softer tone in European markets continued yesterday as nervous investors continued to lock in profits as the EuroStoxx 50 dropped to levels last seen in late September, before rebounding.

"The reasons for the sell-off aren’t immediately obvious [...] It could just be that in the absence of further catalysts to go higher and valuations already quite rich that momentum has started to turn and it is time to lock in some profits as we head towards the end of the year."

On the economic front, Eurostat confirmed that gross domestic product in the single currency bloc expanded at a quarterly pace of 0.6%, as Germany's economy accelerated to a quarter-on-quarter pace of 0.8% (consensus: 0.6%), up from a 0.6% clip over the prior three months.

Net foreign trade and gross fixed capital formation both made positive contribution to the quarterly rates of growth in the euro area's largest economy, according to the Ministry of Finance.

In parallel, the ZEW institute's economic sentiment index for Germany edged higher by 1.1 points to 18.7 (consensus: 19.8)

Later in the day, US factory gate figures for October were scheduled for release at 1330 GMT, followed by a speech from Atlanta Fed chief Raphael Bostic at 1905 GMT.

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