European stocks inch higher, banks slide after HSBC warning

Credit: REUTERS/STAFF

European shares inched higher on Monday as German stocks outperformed on the back of improving Chinese manufacturing data, but a warning from Europe's biggest lender HSBC over rising bad loans sent banking stocks lower.

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Aug 3 (Reuters) - European shares inched higher on Monday as German stocks outperformed on the back of improving Chinese manufacturing data, but a warning from Europe's biggest lender HSBC over rising bad loans sent banking stocks lower.

The pan-European STOXX 600 index .STOXX were up 0.1% at 0714 GMT, with technology .SX8P, automakers .SXAP and oil & gas firms .SXEP leading the gains.

The exporter-heavy German bourse .GDAXI gained 0.6% after a private sector survey showed manufacturing activity in China expanded at the fastest pace in nearly a decade as domestic demand improved.

Euro zone manufacturing PMI data are scheduled for release at 0800 GMT.

However, the gains were capped as U.S. lawmkers were divided over another coronavirus stimulus package, while worries remained about a further tightening of restrictions in Europe as COVID-19 cases rose.

Banking stocks .SX7P took a hit as HSBC HSBA.L dropped 4.4% after its half-yearly profits more than halved and the lender warned its bad debt charges could blow past a previous estimate to $13 billion this year.

France's Societe Generale SOGN.PA also declined 2.3% as it reported a 1.26 billion euro ($1.48 billion) second-quarter loss after booking a writedown on the value of its trading business.

Siemens Healthineers SHLG.DE was down 4.8% after the German health group said it was buying U.S. firm Varian Medical Systems VAR.N for $16.4 billion.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2787;))

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