Europe midday: Markets fall amid Sino-US trade pessimism
European stocks were lower at lunchtime on Thursday as reports suggested Beijing and Washington remain a long way from agreeing a full trade deal.
At 1156 GMT, the Stoxx 600 was 0.4% lower at 397.29, as Germany's Dax dropped by 0.3% to 12,876.70 and the French CAC 40 fell by 0.4% to 5,741.22. Meanwhile, London's FTSE 100 was 1.0% lower at 7,256.56.
Bloomberg reported that Chinese government officials are doubtful that the US and China can agree to a comprehensive long-term trade deal, putting a dampener on recent reports that the two superpowers are close to signing a “phase one” agreement.
IG analyst Chris Beauchamp said: "It should come as no surprise, but China appears not to trust Donald Trump over the putative trade deal. Coming off the back of a substantial run-up in equities, such news would be the almost perfect cue for a pullback, even if of only brief duration.
"Markets remain acutely sensitive to any trade war headlines, and so we will be watching the likes of the Dax in Europe and US small caps for signs of a rebound in risk-off sentiment. It is possible too that a revival of trade wars upends the Fed’s thesis from last night’s meeting, and pushes the Fed towards more action in December."
The Fed cut interest rates by 0.25% for the third time in four months on Wednesday evening, with Fed chief Jerome Powell stating that "the current stance of monetary policy is likely to remain appropriate".
Oanda analyst Craig Erlam said: "Powell and his colleagues have clearly satisfied investors craving for cuts and eased recession fears going into 2020. The mid-cycle adjustment would appear to be over and investors are at ease with that, with no more cuts expected until this time next year.
"Of course, a lot can change in that time and the US and global economy's problems are not behind them, but this has certainly alleviated some of those pressures."
China's official manufacturing purchasing managers' index (PMI) contracted for a sixth consecutive month as it fell from 49.8 in September to 49.3 in October, below an expected reading of 49.8.
Meanwhile, non-manufacturing PMI came in at 52.8, falling short of an anticipated reading of 53.7.
Pantheon Macroeconomics analysts said: "October’s official survey data suggest that the economy’s is still deteriorating and the authorities will soon have to admit that. As such, we continue to expect at least a 10bp cut to the rate corridor before the end of the year and another phased lowering of the RRR (reserve requirement ratio)."
Meanwhile, Eurozone GDP unexpectedly grew by 0.2% during the third quarter, according to Eurostat, beating consensus expectations for increase of 0.1%.
Among individual stocks, PSA Peugeot dived and Fiat Chrysler surged after the two agreed to a merger that will result in the fourth-largest automaker in the world.
ASM International rose after the Dutch semiconductor manufacturer reported record third-quarter sales and predicted further improvements during the final three months of the year.
French satellite operator Eutelsat Communications topped the Stoxx 600's fallers after falling around €11m short of first-quarter revenue expectations and slashing full-year revenue guidance for its operating verticals division.
Oil giant Royal Dutch Shell was also in the red after lower oil prices sent its third-quarter profits down 15% and the company warned that weak macroeconomic conditions and a challenging outlook made the pace of its share buyback programme uncertain.