Monday, March 20, 2023
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Europe shares close lower on US factory data, China fears

European equities closed lower on Monday as U.S. factory data offered a disappointing take on January, and as concerns over a slowdown in China took hold once more.

The pan-European provisionally closed lower by 1.5 percent at 1,272.43 points, falling to their lowest level in over a month.

Investors worried about the effect of slower growth in China and other emerging markets. New data released over the weekend showed Chinese factory growth slumped to a six-month low in January.

U.S. stocks fell hard on Monday, with the Dow Jones Industrial Average extending losses after its worst monthly percentage drop in January since May 2012. A factory report showed that U.S. manufacturing expanded at a substantially slower pace in January, driving overall factory activity to an eight-month low.

Worries also continued over the state of emerging markets, which depend heavily on investment from China and the United States, and have been hit by the former's apparent slowdown and the gradual roll back of U.S. economic stimulus measures.

Upbeat business surveys in Europe released on Monday were unable to lift investor sentiment.

They showed that euro zone factories enjoyed their strongest month since mid-2011 in January as new orders flooded in, prompting them to take on new staff for the first time in two years. Markit's final euro zone Manufacturing Purchasing Managers' Index (PMI) rose to 54.0, beating an earlier flash reading of 53.9 and better than December's 52.7.

Ryanair flying

Shares in , the Irish airline and Europe's largest by passenger numbers, closed up by around 6.8 percent. While the low-cost carrier reported its biggest third-quarter loss in five years with average fares falling 9 percent, the company's management said that price competition on the continent was easing and forward bookings were increasing.

However, Lloyds Banking Group pegged the FTSE 100 back, with shares sinking roughly 4 percent at close. It said Monday that it would report better-than-expected profits for 2013, but it also set aside another £1.9 billion ($3.1 billion) to pay off mis-selling settlements. Shares still sunk 2.3 percent in early trade.

(Read more: Lloyds hikes forecasts despite mis-selling charge)

Bailed-out Spanish lender reported full-year earnings that fell short of expectations Monday, with the bank posting a 2013 net profit of 509 million euros ($686 million), below forecasts of 530 million euros from analysts polled by Reuters. However, there was a recovery in its lending business, with net interest income hitting 690 million euros in the fourth quarter, up more than 7 percent from the previous quarter.

(Read more: Bankia's 2013 earnings miss expectations)

Swiss banking group Julius Baer also closed lower on Monday, dropping nearly 6 percent. The group reported a 19 percent rise in full-year adjusted net profit which nevertheless came in below forecasts. It said it would focus on improving cost efficiency in 2014.

(Read more: Julius Baer profit rises; bank to focus on costs)

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