European stocks slip on weak China data, regulation worries

European shares slipped on Wednesday as worries about a slowing Chinese economy, declines in luxury and travel stocks and soaring UK inflation kept the main indexes under pressure.

The benchmark STOXX 600 index was down 0.1 per cent in morning trade, and off about 2 per cent from the record high in mid-August.

Asian stocks took a hit after data showed China’s factory and retail sectors faltered in August with output and sales growth hitting one-year lows following fresh coronavirus outbreaks and supply disruptions.

Retail and travel & leisure stocks were the top decliners in Europe, down almost 1 per cent, on concerns over the fresh Covid-19 outbreak in China’s Fujian province and signs of tighter regulations in Macau, the world’s largest gambling hub.

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French luxury goods makers LVMH and Kering fell over 3 per cent.

"China is having a real review of everything at the moment. If you look at the sector that's got hammered today, it would be the Macau casinos," said Keith Termperton, a sales trader at Forte Securities.

“That has a knock-on effect in terms of how sentiment is. If you consider Macau, that’s impacted the luxury goods sector in Europe. China retail sales numbers were also pretty weak.”

While optimism about a steady European economic recovery remains, the STOXX 600 is on course to end its seven-month winning streak in September, as investors grow anxious over global growth and monetary policy outlook.

The FTSE 100 edged lower and mid-cap stocks fell 0.3 per cent after data showed British inflation hit a more than nine-year high last month.

Fashion retailer H&M fell 2.8 per cent as quarterly sales increased less than expected, while Zara owner Inditex slipped 1 per cent even as sales approached pre-pandemic levels.

Swedish Match rose 3.4 per cent after the tobacco and nicotine products maker unveiled plans to spin off its US cigar business to shareholders and list it on the stock market.

Dutch online food delivery company Just Eat Takeaway dropped 4. per cent after the Financial Times reported that UK rival Deliveroo and Amazon will offer free delivery to Prime subscribers. Deliveroo gained 0.9 per cent.

Oil stocks were the top gainers as crude prices climbed after industry data showed a larger than expected drawdown in crude oil stocks in the United States.

- Reuters