European stocks lower; Chinese manufacturing data, European inflation in focus

Investing.com - European stock markets traded sharply lower Wednesday after disappointing Chinese manufacturing data weighed on sentiment, with key regional inflation data also in focus.

At 03:15 ET (07:15 GMT), the DAX index in Germany traded 0.8% lower, the CAC 40 in France fell 0.9% and the FTSE 100 in the U.K. dropped 0.7%.

Data released earlier Wednesday showed that the Chinese manufacturing sector shrank in May, retreating for the second straight month. 

China’s official manufacturing purchasing managers’ index was 48.8 in May, below the expected 51.4 and the prior month’s reading of 49.2. This pointed to a slowdown in the rebound seen earlier in the year in the second-largest economy in the world and a major export market for European companies.

Chinese non-manufacturing PMI fell to 54.5 for the month, lower than expectations of 54.9, and the prior month’s reading of 56.4. This saw overall Chinese business activity, represented by the composite PMI, fall to 52.9 in May from 54.4 in the prior month. 

This economic disappointment overshadowed the news that the U.S. debt ceiling bill cleared an important procedural hurdle en route to a vote in the House of Representatives later Wednesday.

Back in Europe, the economic calendar is dominated by national CPI releases from a number of major European countries ahead of Thursday's flash eurozone inflation number.

The German state of North Rhine Westphalia, the most populous in the country, started the ball rolling earlier Wednesday, recording an annual inflation rate of 5.7% in May, considerably below the 6.8% expected and revised prior number of 6.7%.

French consumer prices rose 5.1% on an annual basis in May, below the 5.7% expected and the 5.9% seen in April. 

This news, coupled with Tuesday’s encouraging drop in Spanish consumer prices, support the European Central Bank officials who say the continent’s historic price spike is fading and interest-rate increases can soon end. 

In corporate news, Glencore (LON:GLEN) stock fell 0.7% after a Bloomberg report indicated the commodities giant is getting closer to increasing its offer for Teck Resources (NYSE:TECK), in an attempt to secure the acquisition of the Canadian miner.

Oil prices weakened Wednesday after the disappointing Chinese economic data raised further concerns about the economic recovery in the second-largest economy in the world and the largest crude importer.

These worries stand in contrast to the optimism at the beginning of this year, and raised questions over whether a rebound in the country will drive oil demand to record highs this year.

By 03:15 ET, U.S. crude futures traded 0.4% lower at $69.19 a barrel, while the Brent contract dropped 0.3% to $73.42. 

Additionally, gold futures fell 0.1% to $1,975.85/oz, while EUR/USD traded 0.6% lower at 1.0676.