European Stocks Settle Sharply Lower

(RTTNews) - European stocks tumbled on Wednesday as concerns about economic slowdown following disappointing data out of China, and prospects of further interest rate hikes by the Federal Reserve and other leading central banks rendered the mood bearish.

Data showed manufacturing activity in China shrank faster than expected in May on weakening demand, raising uncertainty over post-Covid recovery. Meanwhile, service sector activity expanded at the slowest pace in four months. The official manufacturing PMI dropped to a five-month low of 48.8 from 49.2 in April while the non-manufacturing PMI fell to 54.5 from 56.4.

Investors also closely followed the developments regarding the bill to raise the U.S. debt ceiling. The debt ceiling bill is expected to be voted on in the House later today.

In the UK market, Prudential and Ocado Group lost 6.1% and 5.84%, Entain declined 4% after the company revealed it expects to be hit by a large fine as part of an investigation by Britain's tax authority over historic corporate misconduct involving former third-party suppliers.

ABRDN, Baclays, BP, WPP, Shell, Aviva, Frasers Group, Mondi, Burberry Group, Lloyds Banking Group, Smurfit Kappa Group, Barratt Developments and Natwest Group lost 2 to 3%.

B&M European Value Retail shares surged more than 8% after the discount retailer said it expects current adjusted core earnings to be higher in 2024.

Endevaour Mining climbed 5.8%. Sage Group, Astrazeneca, Auto Trader Group and Relx gained 1 to 2%.

In Paris, Renault, Essilor, Stellantis, Michelin, Societe Generale, Kering, Saint Gobain, Hermes International, LVMH, Unibail Rodamco, BNP Paribas and ArcelorMittal lost 2 to 3.1%.

Capgemini rallied nearly 7%. Veolia, Dassault Systemes and Sanofi posted moderate gains.

In the German market, Covestro and Continental lost about 4.8% and 4.7%, respectively. Allianz, BASF, Siemens Energy, Zalando, Adidas, Bayer, Commerzbank, Fresenius, BMW, Siemens, Mercedes-Benz and Brenntag ended lower by 2 to 4%.

In European economic news, Germany's import prices declined at the fastest pace since 2009, falling by 7% on a yearly basis in April, following a 3.8% drop in March, data from Destatis showed.

Germany's unemployment increased less than expected in May despite the economy entering a technical recession in the face of high inflation and tight monetary policy.

The number of unemployed persons increased 9,000 in May, the Federal Labor Agency reported. This followed an increase of 23,000 in April and 18,000 in March. Economists had forecast unemployment to increase 15,000.

Data from the statistical office INSEE showed the French consumer price inflation moderated more than expected to hit a 13-month low in May on food and energy prices. Consumer prices grew 5.1% from a year ago, following a 5.9% rise in April, the provisional estimate showed.

The statistical office also confirmed that the second-largest economy recovered as previously estimated in the first quarter despite the weak domestic demand.

However, slowing inflation and weak household consumption suggested that the rebound is unlikely to last long.