European Equity Benchmarks Close Lower; Eurozone Growth Slowest in Over Two Years

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The broad-based major European indices closed lower in Tuesday trading as telecommunications, automotive, and supermarket stocks weighed down the markets.

In economic news, the euro area economy expanded at its slowest rate for more than two years in October, according to the final IHS Markit Eurozone PMI Composite Output Index. October's reading of 53.1 was down from the 54.1 during the previous month to its lowest since September 2016.

"Eurozone companies reported a disappointing start to the fourth quarter," said Chris Williamson, IHS Markit's chief business economist. "Business activity is growing at its slowest rate for over two years and expectations have slumped to the bleakest since the end of 2014."

Both the manufacturing and service sectors recorded slower rates of growth during October as manufacturing posted its lowest growth in nearly four years. The service sector also saw its slowest expansion since the start of 2017.

The strongest increase in activity was reported in Ireland, despite output rising at its slowest rate for seven months. Both France and Spain recorded healthy gains in activity, with growth in each case remaining above historical averages, while Germany saw growth slump to a five-month low and the lowest in over two years, while Italy registered a fall in activity for the first time since the end of 2014.

Meanwhile Eurostat, the statistical office of the European Union, reported that industrial producer prices rose 0.5% in the euro area (EA19) and 0.6% in the EU28 in September, compared with August. Compared with September 2017, industrial producer prices rose 4.5% in the euro area and 4.9% in the EU28. In August, prices increased 0.4% in both zones.

The highest monthly increases in industrial producer prices were recorded in Belgium, Lithuania and the UK (all +0.9%), Spain, Hungary, and the Netherlands (all +0.8%), while the largest monthly decreases were in Estonia (-1.3%), Denmark (-1.1%) and Latvia (-0.7%). The highest annual increases were seen in Belgium (+9.0%), Hungary (+8.4%), Denmark (+7.6%) and Estonia (+7.4%), while the only decrease was noted in Ireland (-2.8%).

In Germany, price-adjusted new orders in manufacturing had increased a seasonally and calendar adjusted 0.3% in September from the previous month, according to provisional data from the Federal Statistical Office (Destatis). For August, revision of the preliminary outcome resulted in an increase of 2.5% compared with July. Price-adjusted new orders without major orders in manufacturing had decreased in September a seasonally and calendar adjusted 1.6% on the previous month.

Domestic orders increased 2.8%, and foreign orders decreased 1.4% in September from the previous month. New orders from the euro area were up 2.4%, while new orders from other countries decreased 3.7% compared to August. In September the manufacturers of intermediate goods saw new orders fall 1.7% compared with August. The manufacturers of capital goods showed increases of 1.4% from the previous month, while consumer goods saw an increase in new orders of 2.1%.

In equities, telecommunications operator BT Group, and Wm Morrison Supermarkets led the FTSE lower in London, falling 4.5% and 4% respectively, followed by construction materials supplier CRH, and mining company Glencore, which lost 3.7% and 2.9%. Telecommunications operator Vodafone, was off 2.7%, while turnaround firm Melrose Industries, online food ordering company Just Eat, and hospitality company InterContinental Hotels Group each closed 2.6% lower.

In Frankfurt, electricity and natural gas supplier E.ON, and adhesives manufacturer Covestro helped nudge the DAX into negative territory, falling 1.8% and 1.1%, while Deutsche Bank declined 1%. Chemicals company BASF, airline operator Lufthansa, and industrial manufacturing company Siemens each closed 0.9% lower, while automaker Daimler, tire maker Continental, and pharmaceutical firm Merck were off 0.8% each.

And in Paris, telecommunications, media, and construction conglomerate Bouygues led the CAC lower, falling 2%, followed by luxury goods company LVMH Moet Hennessy Louis Vuitton, and It firm Atos, which dropped 1.7% and 1.5% respectively. Pharmaceutical firm Sanofi, and construction company Vinci were down 1.3% and 1.2%, while industrial gases company Air Liquide, and auto parts supplier Valeo, and supermarket operator Carrefour each closed 1.1% lower.

The FTSE fell 0.89%, the DAX lost 0.09%, and the CAC-40 dropped 0.51%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 All rights reserved. Unauthorized reproduction is strictly prohibited.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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