By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets declined for a
second day on Thursday after data showed the Chinese manufacturing
sector contracted more than expected in January and the U.S.
Federal Reserve further tapered its asset purchases.
The Stoxx Europe 600 index dropped 0.6% to 320.47, building on a
0.6% loss from Wednesday.
Earnings were in the spotlight in the corporate space, with
several heavyweights moving after releasing results. Shares of
Diageo PLC lost 4.8% after the British drinks maker said demand had
been volatile in emerging markets in the first half of the year,
with sales in the Asia-Pacific region dropping 10%.
Hennes & Mauritz AB (HNNMY) gave up 3% after the Swedish
fashion retailer reported fourth-quarter profit below analyst
expectations.
On a more upbeat note, shares of Givaudan SA rallied 6.7% after
the Swiss fragrance maker reported strong growth in the fourth
quarter.
More broadly, investors weighed the latest news from China and
the U.S. In China, the HSBC purchasing managers index fell to a
final reading of 49.5 in January, below a preliminary estimate of
49.6 and a signal the sector is contracting. When the flash
estimate came out last week, economists hadn't expected the index
to slip into contraction territory. The surprise sparked a wider
selloff in emerging-markets assets and other perceived riskier
papers, such as equities.
In the U.S., the Fed late Wednesday said it would reduce its
asset-purchase program by another $10 billion to bring it down to
$65 billion a month, which was broadly expected by analysts.
U.S. stocks closed lower after the decision, but stock futures
pointed to a higher open on Thursday.
On the data front in Europe, labor-market figures from Germany
showed unemployment fell by 28,000 in January, better than the
5,000 expected.
The upbeat data, however, weren't enough to lift the DAX 30
index , which declined 0.5% to 9,290.25, broadly in line with the
rest of Europe.
France's CAC 40 index dropped 0.6% to 4,131.39 and the U.K.'s
FTSE 100 index fell 0.4% to 6,516.14.
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