* FTSEurofirst 300 down 0.3 pct, Euro STOXX 50 0.3 pct lower
* Weak Spanish PMI send European shares into the red
* Spanish utilities hit by reform doubts
* ThyssenKrupp falls after asset sale, capital raise
By David Brett
LONDON, Dec 2 European shares turned red early
on Monday as weak manufacturing figures from Spain spooked
investors ahead of a busy week on the economic data front.
Spain's IBEX hit a session low after data showed the
country's manufacturing sector contracted in November for first
time since July, suggesting that the recent recovery in Europe's
economy remains tepid.
"Spain's PMI data is surprisingly disappointing. Recent data
has fuelled hopes of a turnaround, but clearly, we're not there
yet. This was enough to trigger some equity selling programmes,"
said David Thebault, head of quantitative sales trading at
Investors will also keep a close eye on PMI readings for
France, Germany and the euro zone, due later on Monday.
Economists expect a reading of 51.5, unchanged from October, for
the euro zone manufacturing PMI, due at 0858 GMT. A reading of
50 separates contraction from expansion compared with a month
By 0835 GMT, the FTSeurofirst 300 was down 3.17
points or 0.3 percent at 1301.90.
Utilities were the biggest drag on the index, down
Spain's main utilities fell after the Finance Ministry
withdrew 3.6 billion euros ($4.9 billion) in financing for the
electricity sector in an unexpected amendment in Parliament,
casting doubt on the reform and raising costs for companies.
Iberdrola shares shed 1.5 percent, Gas Natural
dropped 0.9 percent and Endesa slipped 1.3
UK utilities were under pressure too after British Prime
Minister David Cameron promised to cut rising energy costs.
Top individual faller was ThyssenKrupp, which
slipped 6.5 percent after the company struck a deal to sell its
U.S. steel plant, leaving it with its loss-making steel mill in
Brazil, and announced a capital increase.
Volumes over the past few weeks have been tailing off with
European stocks at five-year highs and investors awaiting
further clarification from central bankers on the outlook for
equity-friendly monetary policy.
In terms of volumes, November was second quietest month this
year on STOXX and FTSEurofirst after August.
Investors will have a raft of economic data from the euro
zone to mull over, but this week's U.S. macroeconomic data,
particularly Friday's payrolls, will be the main event and could
shed light on the outlook for the Federal Reserve's stimulus
"The market focus is towards the payroll data this week with
expectations that a strong number will perhaps move tapering to
this month. We still see no tapering into February/March and
post Friday we see more clarity on the expected timeline," Atif
Latif, director at Guardian Stockbrokers, said.
He added he saw higher equity market levels over the coming
weeks supported by forward looking guidance.
Deutsche Bank echoed that sentiment as the German lender
raised its 2014 target for the Stoxx 600 to 375 from
345, which suggests a further 15 percent upside from current
Deutsche said it was sticking with the pro-cyclical,
pro-financials, pro-value, pro-Eurostoxx position it initiated
in October 2012.