Europe midday: Markets fall on trade fears; eurozone sentiment improves
European stocks were lower at lunchtime on Thursday as investors feared a new law passed in Washington could scupper progress made in trade negotiations with Beijing.
At 1156 GMT, the Stoxx 600 was 0.2% lower at 409.09, as Germany's Dax fell by 0.4% to 13,238.85 and the French CAC 40 dropped by 0.2% to 5,915.91. Meanwhile, London's FTSE 100 was 0.4% lower at 7,403.04.
US President Donald Trump signed the Hong Kong Human Rights and Democracy Act into law on Wednesday, a bill that mandates an annual review of Chinese interference in the former British colony and is widely seen as being supportive of pro-democracy demonstrators.
The Chinese ministry of foreign affairs responded by accusing the US of having "sinister intentions", before warning that the new law would "only make the Chinese people more united and make the American plot doomed to fail".
IG analyst Joshua Mahony said: "The possibility of sanctions in the event of human rights abuses in Hong Kong signals a willingness to stand against the Chinese at a time when markets are hoping for the two sides to find common ground to agree a phase one trade deal.
"The notion that such a deal is imminent appears to be dubious given this latest step, yet the weakness we are currently seeing for stocks will likely fade as the topic moves out of the headlines. Unless the Chinese begin a military crackdown or decide to retaliate against the US, this topic will likely fade away as an issue soon enough."
Data from the European Commission showed that eurozone economic sentiment rose by slightly more than expected in November, to 101.3 from last month's reading of 100.8.
Analysts from Oxford Economics said: "The relatively positive news coming from the recent eurozone surveys across the bloc points to some stabilisation in economic activity - in line with our view that eurozone growth will remain broadly stable in the near-term, before improving slightly into 2020."
Among individual stocks, Telefonica rose after the Spanish company announced plans to split out part of its Latin American business as part of a strategy to generate more than €2bn a year in extra revenues by 2022.
Elekta dropped after the Swedish radiation therapy specialist said delayed installations had hampered its revenue growth and profitability in the second quarter, though profit and order intake was in line with revised expectations following strong growth in North America.
French spirits maker Remy Cointreau spilled lower after its first half operating profits declined, missing expectations.
Lufthansa was also in the red after US aviation authorities proposed a $6.4m civil penalty against the German airline due to accusations that it made hundreds of unapproved flights in the country.