Weak French and Chinese data knock back European shares

Thu Feb 20, 2014 3:54am EST

* Weak French and Chinese data weighs on European equities

* FTSEurofirst 300 down 0.9 pct

* Euro STOXX 50 down 1.1 pct

By Sudip Kar-Gupta

LONDON, Feb 20 (Reuters) - Weak French and Chinese economic data knocked back European stock markets on Thursday, leaving a pan-European equity index nursing its worst intraday loss in more than two weeks.

The FTSEurofirst 300 index fell 0.9 percent to 1,327.75 points in early session trading, its biggest intraday fall since a 1.4 percent decline on Feb. 3.

The euro zone's blue-chip Euro STOXX 50 index also fell 1.1 percent to 3,086.81 points.

Although data on Thursday showed growth in Germany's private sector, France's service sector shrank the most in nine months in February.

Further weighing on global equity markets was data showing that China's flash Markit/HSBC Purchasing Managers' Index (PMI) fell to a seven-month low of 48.3 in February from January's final reading of 49.5. A reading below 50 indicates a contraction while one above shows expansion.

Investors were also rattled by minutes of the U.S. Federal Reserve's latest policy-setting meeting, which indicated the U.S. central bank will keep trimming its bond-buying stimulus unless there is a significant economic surprise and could change its forward guidance on interest rates.

"I think we're in for more sell-offs," said Darren Courtney-Cook, head of trading at Central Markets Investment Management.

"We've had bad Chinese data and the very fact that there is chatter about the Fed changing its guidance on rates is also weighing on sentiment," he added.

Courtney-Cook said he had sold positions on Germany's DAX futures contract at 9,700 points before buying back in at 9,500 points.

Toby Campbell-Gray, head of trading at Tavira Securities, also expected European shares to fall in the next few sessions but remained more bullish on a longer time-frame over 2014.

"I do see the market as being a little bit softer in the next few days but I would use days like this to pick up quality stocks," he said.

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