Traders work at the Frankfurt stock exchange. The DAX 30 closed down 0.66% to 9,920.92 points yesterday.

AFP/London

 

European stock markets closed in the red yesterday as traders reacted to a further drop in eurozone business activity that offset positive news for Chinese manufacturing, analysts said.

London’s FTSE 100 index of top companies lost 0.36% to 6,800.56 points, while Frankfurt’s DAX 30 fell 0.66% to 9,920.92 points and the CAC 40 in Paris slumped 0.57% to 4,515.57 points compared with Friday’s closing levels.

The euro dipped to $1.3591 from $1.3597 late in New York on Friday.

“Stocks in Europe were weak from the offset today as any hopes of a bounce from positive Chinese data were soon undone by concerns over Iraq and missed expectations for European services and manufacturing data,” said Jasper Lawler, an analyst at CMC Markets.

Alastair McCaig, market analyst at IG traders said however that mining stocks have been in demand “thanks to the (Chinese) news, which has gone some way to leaving the FTSE as the relative outperformer.”

A decision by South African platinum mine workers’ union to end their protracted strike also lent support to mining stocks.

BHP Billiton won 1.92% to 1,938 pence, Randgold Resources gained 1.83% to 4,900 pence and Anglo American climbed 0.96% to 1,470.50 pence.

Eurozone business activity slipped for the second month running in June, suggesting a modest recovery could be stalling, a closely watched survey showed yesterday.

Markit Economics said its Eurozone Composite Purchasing Managers Index (PMI) for June, a leading indicator of overall economic activity, slipped to 52.8 points from 53.5 in May, coming in at the weakest level since December.

The data showed that growth remained robust in Germany, despite weakening slightly, but that the downturn deepened in France, the country increasingly generating the most worry in the currency bloc.

In Paris, shares in power and rail group Alstom slumped 4.11% to €26.85, shedding early gains on a weekend deal for the French state to become a shareholder as US firm General Electric obtained the gas turbine division of the group.

But brokers Aurel BGC said that the formula agreed for the government to buy Alstom shares from conglomerate Bouygues at €35 per share or more was unnecessarily complex.

At Bank of America-Merrill Lynch, analysts said that the market might not like the deal for the state to acquire 20% of Alstom.

Wall Street was also down, with Dow Jones dipping 0.24% and Nasdaq losing 0.13%.

In foreign exchange deals yesterday, the British pound fell to $1.7007 from $1.7010 late on Friday.

The euro slipped to 79.91 pence from 79.93 pence.

On the London Bullion Market, the price of gold climbed to $1,313.50 an ounce from $1,312.50 on Friday.