Investing.com - European stocks were mildly lower in choppy trade Tuesday, as investors continued to monitor Spanish borrowing costs amid concerns the euro zone’s fourth largest economy will soon need a full-scale sovereign debt bailout.
Weak manufacturing data out of the euro zone also weighed on equities.
During European afternoon trade, the EURO STOXX 50 shed 0.5%, France’s CAC 40 declined 0.1%, while Germany’s DAX 30 eased down 0.1%.
Earlier Tuesday, Spain successfully auctioned EUR3.02 billion of three and six-month government bonds but at higher yields than in the last auction.
Meanwhile, the yield on Spanish 10-year bonds rose to a euro-era high of 7.59%, well above the 7% threshold considered unsustainable if a country is to remain solvent.
Markets also remained jittery after ratings agency Moody’s revised its outlooks on the sovereign ratings of Germany, the Netherlands and Luxembourg to negative from stable after the U.S. market close Monday. Moody’s rates all three at AAA.
The ratings agency cited the possibility of Greece's exit from the euro zone and the impact that would have on Spain and Italy.
Data released earlier in the session showed that manufacturing activity in Germany slowed to the lowest level in more than three years in July, one day after rating’s agency Moody’s cut its outlook on Germany to negative from stable.
Separate reports showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, while the French manufacturing sector contracted at the fastest pace in 38 months.
The weak euro zone data offset a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
In Spain, the IBEX 35 index was down 2.3%. Shares in the nation’s largest lender Banco Santander lost 3.1%, while BBVA dropped 2.4%.
Elsewhere, Italy’s FTSE MIB 40 index sank 1.3% after the yield on Italian 10-year government debt rose to 6.44%. Intesa Sanpaolo shares fall 2.3%, while Unicredit shed 0.9%.
On the upside, shares in German business software company SAP jumped 2.4% after reporting a 12% increase in second quarter earnings, as fewer but bigger software deals and increased sales to financial and retail companies boosted results.
Elsewhere, in London, the FTSE 100 slipped 0.1%, as lenders tracked their European counterparts lower. Barclays slumped 0.6%, while Lloyds Banking Group dropped 1%.
On the upside, Man Group saw shares rally 8% after it reported a pretax loss of USD164 million for the six month period to June 30, but added that it plans to make further cost savings of USD100 million over the next 18 months.
In the U.S., equity markets pointed to a broadly lower open, as investors focused on the euro zone’s debt woes while awaiting earnings from Apple after Tuesday’s closing bell.
The Dow Jones Industrial Average futures pointed to a loss of 0.1%, S&P 500 futures signaled a decline of 0.15%, while the Nasdaq 100 futures indicated a drop of 0.1%.
Later in the day, the U.S. was also to release preliminary data on manufacturing activity, while Federal Reserve Chairman Ben Bernanke was to speak.
Weak manufacturing data out of the euro zone also weighed on equities.
During European afternoon trade, the EURO STOXX 50 shed 0.5%, France’s CAC 40 declined 0.1%, while Germany’s DAX 30 eased down 0.1%.
Earlier Tuesday, Spain successfully auctioned EUR3.02 billion of three and six-month government bonds but at higher yields than in the last auction.
Meanwhile, the yield on Spanish 10-year bonds rose to a euro-era high of 7.59%, well above the 7% threshold considered unsustainable if a country is to remain solvent.
Markets also remained jittery after ratings agency Moody’s revised its outlooks on the sovereign ratings of Germany, the Netherlands and Luxembourg to negative from stable after the U.S. market close Monday. Moody’s rates all three at AAA.
The ratings agency cited the possibility of Greece's exit from the euro zone and the impact that would have on Spain and Italy.
Data released earlier in the session showed that manufacturing activity in Germany slowed to the lowest level in more than three years in July, one day after rating’s agency Moody’s cut its outlook on Germany to negative from stable.
Separate reports showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, while the French manufacturing sector contracted at the fastest pace in 38 months.
The weak euro zone data offset a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
In Spain, the IBEX 35 index was down 2.3%. Shares in the nation’s largest lender Banco Santander lost 3.1%, while BBVA dropped 2.4%.
Elsewhere, Italy’s FTSE MIB 40 index sank 1.3% after the yield on Italian 10-year government debt rose to 6.44%. Intesa Sanpaolo shares fall 2.3%, while Unicredit shed 0.9%.
On the upside, shares in German business software company SAP jumped 2.4% after reporting a 12% increase in second quarter earnings, as fewer but bigger software deals and increased sales to financial and retail companies boosted results.
Elsewhere, in London, the FTSE 100 slipped 0.1%, as lenders tracked their European counterparts lower. Barclays slumped 0.6%, while Lloyds Banking Group dropped 1%.
On the upside, Man Group saw shares rally 8% after it reported a pretax loss of USD164 million for the six month period to June 30, but added that it plans to make further cost savings of USD100 million over the next 18 months.
In the U.S., equity markets pointed to a broadly lower open, as investors focused on the euro zone’s debt woes while awaiting earnings from Apple after Tuesday’s closing bell.
The Dow Jones Industrial Average futures pointed to a loss of 0.1%, S&P 500 futures signaled a decline of 0.15%, while the Nasdaq 100 futures indicated a drop of 0.1%.
Later in the day, the U.S. was also to release preliminary data on manufacturing activity, while Federal Reserve Chairman Ben Bernanke was to speak.