Europe close: Stocks mostly higher despite weak manufacturing PMIs

European stocks were mostly higher at the start of August, even as investors digested weak manufacturing data for the eurozone and China.

The pan-European Stoxx 600 index was flat at 438.29, alongside a 0.87% decline for Spain's Ibex 35 to 8,085.10, but the all of the other main regional indices ended the session higher.

Front-dated Brent crude oil futures fell back 4.1% to $99.9 a barrel on the ICE while the euro put on 0.52% against the US dollar to end the day at 1.0273.

At the weekend, China's National Bureau of Statistics's manufacturing purchasing managers’ index unexpectedly fell to 49.0 in July, from 50.2 in the previous month and missing market forecasts of 50.4.

"The country was already facing an uphill challenge, to put it mildly, with regards to its growth target this year and the fact that manufacturing activity is slowing again doesn't bode well," said OANDA analyst Craig Erlam.

"While the non-manufacturing survey is much healthier, it also experienced a deceleration last month which further suggests the economy is struggling to get back to full strength."

"One positive from the surveys was the improvement in supply chain conditions which should aid the inflation fight around the world. Of course, it is more than just a supply chain problem at this point but every little helps as central banks are forced to hike rates aggressively for fear of inflation becoming entrenched."

Meanwhile in the eurozone, S&P Global confirmed that manufacturing activity contracted last month with factories holding larger inventories of goods due to weak demand, according to a survey.

S&P Global's final manufacturing Purchasing Managers' Index fell to 49.8 in July from June's 52.1, just ahead of a preliminary reading of 49.6 but its first time below the 50 mark separating growth from contraction since June 2020.

Also weighing on investor sentiment, Germany's Federal Office of Statistics reported a 1.6% month-on-month drop in retail sales, missing economists' forecasts for a rise of 0.4% by a wide margin.

In equity news, shares in UK wealth management firm Quilter surged 15% on reports at least four bidders were circling the company.

UK bank NatWest and private equity firms CVC, Bain Capital and BC Partners were among the reported suitors.

Pearson shares jumped more than 13% as the education and publishing company posted strong quarterly results, while HSBC climbed 6.13% after raising profitability targets and pledging to resume dividends next year.

Swedish real estate company SBB fell 5% after Goldman Sachs downgraded the stock to 'sell' from 'neutral'.