Europe close: Stocks eke out but a small bounce

Stocks on the Continent only managed to eke out but a small bounce on Thursday, after less severe than had been feared US trade tariffs on European luxury goods were offset by survey readings pointing to stalling euro area economic growth and that Germany might have fallen into recession in the third quarter.

By the close of trading, the Stoxx 600 was down 0.02% at 377.46, as the French CAC 40 added 0.30% to 5,438.77. Germany's Dax was closed for a public holiday, while London's FTSE 100 was 0.63% lower at 7,077.64.

On Wednesday evening, the White House released a list of EU goods it plans to slap with tariffs, including 25% duties on French wine, Scotch and Irish whiskies, and cheese.

The news came after the World Trade Organisation (WTO) had granted the US permission to place duties on as much as $7.5bn-worth of EU products following a dispute over European subsidies paid to Airbus.

Michael Hewson, analyst at CMC Markets, said: "With markets already looking vulnerable over concerns about a manufacturing recession starting to bleed into a slowdown in the services sector, the timing of the WTO ruling could not have come at a worse time for already jittery investors.

The Eurozone IHS Markit Composite Final purchasing managers index (PMI) reading for September sank to 50.1 from August’s 51.9, while the region's services PMI reading came in at 51.6 for September, missing expectations that it would hold steady with last month's reading of 52.0.

The weakness was most pronounced in Germany, where services PMI fell from 54.8 in August to 51.4 in September, falling short of expectations of 52.5.

The data was in particular focus after the release of poor manufacturing data from both sides of the Atlantic sparked fears of global economic slowdown earlier in the week.

Neil Wilson, analyst at Markets.com, said: "These are recessionary readings and as such will heap pressure on the European Central Bank to be more accommodative. Faced with a recession, however, the ECB is out of ammo. It’s already about as loose as it can go – what good does another 20bps of cuts do? Zilch. Nada. Rien."

And commenting on the German services data, IHS Markit principal economist Phil Smith said: "The slowdown in the service sector in September was even worse than first feared, with the final results showing the weakest business activity growth for three years. A technical recession now looks to be all but confirmed."

Among individual stocks, Remy Cointreau, Pernod Ricard, Diageo, Campari and Airbus were all on the rise as planned US tariffs on their goods were less severe than had been expected.

Swedish fashion retailer Hennes & Mauritz (H&M) was also firmly in the green after it beat expectations to post its first quarterly pretax profit growth in more than two years.

Sika was higher after the Swiss adhesives manufacturer outlined plans to use acquisitions and other measures to drive 6-8% annual sales growth through to 2023.