European stocks lower; sentiment hit by signs of global slowdown

Investing.com - European stock markets weakened Wednesday, with investors fretting over further indications of China's faltering economic recovery ahead of the release of key regional services activity data.

At 03:20 ET (07:20 GMT), the DAX index in Germany traded 0.4% lower, the CAC 40 in France fell 0.4%, while the FTSE 100 in the U.K. traded 0.3% lower.

Investors are set to concentrate during European hours on the release of the eurozone’s final services and composite PMIs for June, which are expected to confirm a slowing in what has been a consumption-led economic recovery.

This follows the release of disappointing manufacturing activity data, with surveys showing factory activity in all four of the region's biggest economies contracted last month.

That said, there was some positive economic news earlier Wednesday, with French industrial production rising 1.2% on the month in May, considerably stronger than the fall of 0.2% expected.

China’s services PMI posts lowest reading since January

The day started with sentiment hit by the Caixin/S&P Global services purchasing managers' index, a private survey, indicating that China's services activity expanded at the slowest pace in five months in June, easing to 53.9 in June from 57.1 in May, the lowest reading since January.

With the manufacturing sector also disappointing, these numbers point to softening growth in the second quarter in the second-biggest economy in the world, and a major export market for Europe’s biggest companies.

There was similar news out of Japan, as the final services purchasing managers' index fell to a seasonally adjusted 54.0 last month from a record-high 55.9 in May.

Investors will also be worried that China blocking the export of key chipmaking materials to the U.S. could result in an escalation in a trade conflict between the world’s largest economies.

Eurozone PPI, Fed minutes in focus

The May producer prices for the eurozone are expected to show a weakening of inflationary pressures at the factory gate, while investors will also be carefully watching the minutes of the Federal Reserve's June meeting.

This gathering resulted in a pause in tightening while adding two more rate hikes to the outlook.

Oil hands back some of the week’s earlier gains 

Oil prices retreated Wednesday on renewed worries of a global economic slowdown weighed on market sentiment, overshadowing the news earlier this week of more supply cuts from a series of top producers.

The focus Wednesday will be on the release of the Fed minutes for further clues on the U.S. central bank's outlook, as well as industry data on U.S. crude and product inventories from the American Petroleum Institute, a day later than usual.

By 03:20 ET, the Brent contract dropped 0.4% to $75.92, while U.S. crude futures traded 1.7% higher at $71.00 a barrel, having traded through a U.S. holiday to mark Independence Day without a settlement.

Additionally, gold futures fell 0.1% to $1.932.95/oz, while EUR/USD traded just higher at 1.0881.