Europe close: Investors move to the sidelines ahead of the weekend
A volatile day of trading in Europe came to an end with sharp losses after a closely-followed activity survey in the States came in well beneath forecasts, pointing to an economy on the brink of recession, in part on account of the Chinese coronavirus.
IHS Markit's composite output gauge for manufacturing and services fell from a reading of 53.3 for January to 49.6 in February, missing forecasts for a print of 51.5.
Stocks had earlier managed to reverse their initial losses, despite news of an increase in the number of COVID-19 cases in South Korea and even as the latest economic data underscored the disruptions to the global economy resulting from the coronavirus.
Investors were also managing to brush off news that talks in Brussels on the European Union's next seven-year budget remained deadlocked.
Overnight, South Korea reported 52 more confirmed cases for a total of 208 and the Chinese province of Hubei revised the number of new cases for 20 February higher by 220 to 631 to reflect an outbreak in one of its prisons.
The latter led some observers to highlight the concerns around the reliability of Chinese data.
By session's end, the benchmark Stoxx 600 was down by 0.49% higher at 428.07, alongside a drop of 0.62% on the German Dax to 13,579.33, while Milan's FTSE Mibtel was off by 1.22% to 24,773.15.
Shares of Sopra Steria topped gains on the Stoxx 600 after the information technology consultancy posted a 8.3% increase in full-year consolidated revenues to reach €4,434.0m, alongside a 32.5% jump in free cash flow to €229.3m.
Stock in Belgian telecommunications outfit Proximus was near the other end on the back of a fourth quarter net loss of €24m, as a voluntary redundancy programme weighed on its bottom line.
In the year earlier period, Proximus had clocked in with a €131m profit.
Shares of Moneysupermarket were another top faller on the Stoxx 600, as analysts at Berenberg reiterated their 'sell' stance and told clients that the previous day's gains were overdone.
There was some unexpectely good news to be had on the economic front as IHS Markit's factory and services sector Purchasing managers' Indices revealed that the euro area economy was expanding at its fastest clip in six months in February.
IHS Markit's composite PMI for those two sectors rose from a print of 51.3 for January to 51.6 in February (consensus: 51.0).
Nonetheless, the survey compiler's chief business economist, Chris Williamson, cautioned: "However, the outlook remains highly uncertain, notably in respect to the potential for further disruptions to supply chains, travel, tourism and demand arising from the coronavirus outbreak. In particular, the widespread delivery delays seen in
February bode ill for production in March unless new deliveries can be secured."
A gauge for supplier deliveries in the UK told a similar story, revealing the biggest monthly slowdown since at least 1992.
Fir his part, European Central Bank chief economist Philip Lane told Bloomberg that the latest PMIs were in-line with the monetary authority's own forecasts.
However, the coronavirus definitely constituted a "downside" risk until it was contained, although its impact on the economy was expected to be V-shaped.