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GLOBAL MARKETS-Stocks wilt after weak China data; euro zone GDP in focus

Published 2019-04-30, 04:48 a/m
© Reuters.  GLOBAL MARKETS-Stocks wilt after weak China data; euro zone GDP in focus
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* Euro STOXX 600 .STOXX falls 0.2 percent

* Surveys suggest slower Chinese factory growth this month

* Euro zone GDP data due at 0900 GMT, German CPI at 1300 GMT

* Japanese yen rallies to three-week high

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Wilson

LONDON, April 30 (Reuters) - European equity markets nudged down on Tuesday as weak Chinese business surveys dampened appetite for risk, while investors braced for a spate of data on the region's economic health.

Bourses in Britain, France and Germany followed Asian peers into the red after the surveys on China manufacturing missed forecasts - another sign that Beijing's efforts to spur growth n the world's second biggest economy had yet to bear fruit.

Both official and private business surveys suggested slower Chinese factory growth this month, dashing hopes for a steady reading or even a faster expansion. Data also showed a slower expansion in its services sector. figures underscored questions over prospects for the Chinese economy, with investors across the world already on edge over growing signs of a two-speed global economy where a robust United States outpaces its peers.

The Euro STOXX 600 .STOXX was off 0.2 percent, with British shares .FTSE down 0.2 and bourses in Germany .GDAXI and France .FCHI down 0.1 and 0.4 percent respectively.

All eyes were on euro zone GDP figures, due at 0900 GMT, and data on German CPI, due at 1200 GMT.

Inflation remains a key issue for euro zone policymakers, said Michael Hewson, chief market analyst at CMC Markets

"Unemployment is down, wages are starting to edge higher but inflation remains very subdued," he said. "That is the biggest problem for the European Central Bank in terms of its policy response in trying to lift demand in the euro area."

Forecasts for the euro zone are for a 0.3 percent rise in GDP from the previous quarter.

Earlier, France reported steady growth for the first quarter, while Spain's economy also grew faster than expected. of the euro zone data, corporate earnings were the major factor.

Chipmaker AMS AMS.S AMS.VI jumped 16 percent after beating forecasts for first-quarter profit. AMS is a supplier to Apple AAPL.O , which is due to report its results later.

Banks .SX7P dragged heavily on the STOXX 600. Danske Bank , DANSKE.CO hit by money-laundering scandals, fell more than 6 percent after lowering its outlook for 2019, while No. 1 euro zone bank Santander SAN.MC also slipped after first-quarter net profit.

In contrast, Standard Chartered STAN.L climbed after unveiling plans for share buybacks of up to $1 billion, its first in at least 20 years.

Asian markets fell after the Chinese data amid thin trading. MSCI's broadest gauge of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 0.5 percent. Bourses in South Korea and Hong Kong both fell.

Japan's financial markets are closed throughout the week as Japanese Emperor Akihito prepare to abdicate in favour of his elder son, Crown Prince Naruhito. world equity index .MIWD00000PUS , which tracks shares in 47 countries, was flat. S&P futures were marginally in the red in early trading.

YEN CLIMBS

In currency markets, the weak Chinese data fuelled some gains in Japan's yen JPY= , which rallied to a three-week high amid the country's holiday-thinned trading.

But FX traders were focused on whether European data would push currencies out of recent trading ranges.

Even marginal growth could squeeze speculators who have been amassing large short positions in the euro, worth a net $14.8 billion in the week to April 23. the euro zone data suggest weakness, said Commerzbank (DE:CBKG) FX strategist Thu Lan Nguyen, markets may start to dial back even further predictions of an increase in interest rates by the European Central Bank next year.

"If the data disappoints, there is scope for markets to push back rate hike expectations even further," she said. "This will tell us on whether the ECB will get into the dilemma of being more expansionary."

Against a basket of currencies .DXY the dollar was down 0.1 percent at 97.845.

The Federal Reserve's two-day policy meeting, which ends on Wednesday, was in focus. The Fed is expected to leave interest rates unchanged as it seeks to balance robust economic growth against low inflation. commodity markets, oil prices reversed losses after Saudi Arabia said a deal between producers to withhold output, in place since January, could be extended beyond June to cover all of 2019.

Brent crude futures LCOc1 were last at $71.25 per barrel, down 0.4 percent. Reuters Live Markets blog on European and UK stock markets, please click on: LIVE/

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