By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European equities stuck close to the
flatline and the euro languished at two-year lows against the
dollar on Wednesday, as economic data highlighted the growth
challenges the European Central Bank likely will address at its
meeting tomorrow.
German's manufacturing sector stagnated in September, with data
firm Markit's manufacturing purchasing managers' index falling to
49.9, the first reading below the 50 level since June 2013. A
reading below 50 indicates contraction.
Meanwhile, the eurozone manufacturing PMI slipped to 50.3
compared with a previous estimate of 50.5, Markit said. The French
manufacturing sector contracted last month, but the deterioration
was at its slowest pace in four months.
The near-term outlook looks worrying for the eurozone
manufacturing sector as order books are deteriorating for the first
time since June of last year, "suggesting output could start to
fall as we move into the final quarter of the year," said Markit
Chief Economist Chris Williamson in Wednesday's report.
Markets: The Stoxx Europe 600 was down less than 1 point at
343.02, as investors appeared to stay on the sidelines before the
European Central Bank makes its policy announcement on Thursday.
The euro (EURUSD) fell below $1.26 against the U.S. dollar after
the Markit report, hitting an intraday low at $1.2585. The euro
fetched $1.2631 late Tuesday in New York.
The U.K. FTSE 100 fell 0.3% as shares of supermarkets Sainsbury
and Tesco were hammered.
The U.K. also received downbeat data from Markit, as Britain's
manufacturing sector in September expanded at the slowest pace in
17 months. The pound (GBPUSD) dropped below $1.62 in the wake of
the report.
"The strong upsurge in U.K. manufacturing sector at the start of
the year appears to have run its course," said Rob Dobson, Markit
senior economist, in a note.
"September's disappointing reading will therefore add to the air
of caution as to whether the [U.K.] economy is ready for higher
interest rates," he said.
In Frankfurt, the DAX 30 index moved up 0.1%, topped by a 3.1%
rise in Adidas AG after the German sports wear retailer said it
will pay as much as 1.5 billion euros ($1.9 billion) back to
shareholders by the end of 2017
In France, the CAC 40 shed 0.1%.
Wednesday's action also included the trading debut of shoe and
fashion retailer Zalando SE on the Frankfurt stock exchange. The
shares opened at EUR24.10 ($30.40), above the EUR21.50 issue price.
They were at EUR22.88 in midmorning trade.
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