LONDON European shares fell on Monday after euro zone business activity data showed growth slowing, with France a notable laggard, in contrast with upbeat numbers from China that lifted Asian shares and the Australian dollar.
Brent crude oil prices topped $115 a barrel on concerns that unrest in Iraq, where Sunni insurgents seized control of strongholds along the Syrian border over the weekend, could disrupt supply. [O/R]
The pan-European FTSEurofirst 300 stocks index .FTEU3 fell 0.3 percent, although it held close to Friday's 6-1/2-year high.
Wall Street looked set for a flat open ESc1. The S&P 500 .SPX and Dow Jones .DJI closed at record highs on Friday.
"The market doesn't like at all the French PMIs, and the German data is also disappointing. It eclipses the upbeat Chinese data from overnight and it's a reminder that the latest ECB measures are not magic," Saxo Bank trader Andrea Tueni said.
The euro zone's flash composite purchasing managers' index fell to 52.8 in June, below forecast, from 53.5 in May, data provider Markit said.
"The overall picture is one of fairly sluggish growth as opposed to any rip-roaring acceleration," Markit chief economist Chris Williamson said.
Earlier, the corresponding number for France fell to 48.0 from May's 49.3. slipping further below the 50 level that separates expansion from contraction. Germany's PMI showed its private sector expanded for the 14th consecutive month in June.
The euro inched lower after the German data and was last down 0.2 percent on the day at $1.3580.
European Central Bank President Mario Draghi suggested in a weekend interview that interest rates would stay low at least until the end of 2016.
"The PMI surveys say roughly the same thing as Draghi's comments over the weekend: policy will stay very accommodative in Europe for a long time to come," said a London bank dealer.
Earlier, the HSBC/Markit Flash China PMI showed factory sector activity expanded for the first time in six months in June, offering new signs the economy is stabilising following moves by Beijing to shore up growth.
"This month's improvement is consistent with data suggesting that the authorities' mini-stimulus is filtering through to the real economy," said Qu Hongbin, chief economist for China at HSBC, referring to a series of measures announced by the government in recent months to spur activity.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.5 percent but later gave up the gains. Tokyo's Nikkei index .N225 hit a five-month closing high as the China data added to the positive mood arising from a dovish statement after a U.S. Federal Reserve meeting last week.
The Australian dollar, which closely tracks the economy of Australia's top export market China, rallied.
It gained 0.5 percent to $0.9439, touching the day's of $0.9444, within reach of 2014's peak of $0.9461 hit in April.
The dollar slipped 0.2 percent to 101.85 yen [FRX/].
Brent crude oil LCOc1 last stood at $114.89 a barrel, just short of a nine-month high hit on Friday.
"Oil prices remain a risk. Brent has been trading above $115/bbl, as the security crisis in Iraq continues to deepen," Barclays said in a report.
The China numbers helped nudge longer-term euro zone government bond yields higher, though ECB chief Draghi's comments supported short-term debt. Benchmark two-year German yields edged down to 0.036 percent.
"Positive PMI data from Asia moved core rates a bit higher this morning ... (but given) the ECB's stance, it (would have taken)... a big surprise in euro zone PMI to see major market moves," said Jan von Gerich, chief fixed income analyst at Nordea.
Gold slip further from a two-month high, though safe-haven demand related to Iraq kept it above $1,300 an ounce. It was last at $1,312.
(Additional reporting by Shinichi Saoshiro in Tokyo, Blaise Robinson in Paris, Jamie McGeever and Patrick Graham in London, editing by John Stonestreet)