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 lost 0.3% to 321.24, building on a
0.6% loss from Wednesday.
Among individual stocks, shares of Diageo PLC lost 6.3% 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 3.9% after the Swedish
fashion retailer reported fourth-quarter profit below analyst
expectations.
On a more upbeat note, shares of Givaudan SA rallied 5.6% after
the Swiss fragrance maker reported strong growth in the fourth
quarter.
Royal Dutch Shell PLC (RDSB) gained 2.9% after the U.K. oil
major said it would suspend a drilling project in the U.S. Arctic
and would look to improve returns. The company also reported a 71%
decline in fourth-quarter profit largely due to rising costs and
lower oil and gas volumes.
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, slightly 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. Still,
U.S. stocks dropped after the decision. Stock futures pointed to a
slightly higher open on Thursday.
On the data front in Europe, a report from Spain showed the
country's economic recovery picked up pace in the fourth quarter,
with gross domestic product rising 0.3%. For the full year, the
Spanish economy contracted 1.2%. The IBEX 35 index added 0.1% to
9,909.90.
In Germany, labor-market figures 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 0.3% to 9,308.99, broadly in line with the
rest of Europe.
France's CAC 40 index dropped 0.2% to 4,148.78 and the U.K.'s
FTSE 100 index fell 0.3% to 6,524.39.
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