London/Paris - European shares edged lower on Wednesday, following mixed data on manufacturing and sales warnings from J Sainsbury and Nexans that fuelled worries over European corporate results.
At 12:21 SA time, the pan-European FTSEurofirst 300 index was down 0.2 percent at 1,377.88 points after data showed German manufacturing activity shrank for the first time in 15 months in September.
Overall, manufacturing growth in the euro zone slowed further as new orders contracted for the first time in over a year.
Barclays France director Franklin Pichard said the weak data, coupled with Tuesday's figures showing a slowdown in euro zone inflation, will add pressure on the European Central Bank.
“Once again, the central bank will have to convince investors that it has the firepower to stave off deflation risks,” he said.
“We'll wait for Thursday's ECB meeting before buying the market.”
French cable maker Nexans tumbled 8.5 percent after saying full-year revenue would be flat, while British retailer J Sainsbury dropped 5.9 percent after cutting its full-year sales target and saying its strategic review would include future dividend policy, while
“Sainsbury's share price has worsened considerably of late ... as an ongoing result of the increasing competition from the discounters.
The market remains unconvinced on its prospects and the consensus now comes in at a weak hold,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
Spanish stocks, however, outperformed, with Madrid's IBEX up 0.2 percent, after data showed the country's manufacturing expanded for the 10th straight month in September amid an economic recovery.
Broadly, European share indexes have been falling over the past two weeks, dragged down by a flurry of sales and profit warnings as well as by growing concerns over the timing of the US Federal Reserve's expected interest rate hike next year.
“Since the Fed meeting on September 17, we've seen a 'risk-off' trade, with the fixed income market playing its role of 'safe-haven' while equities and commodities have been slipping in negative territory,” said Gregory Raccah, head of quantitative strategies at YCAP Asset Management.
Greek banks featured among the top gainers in Europe, with Piraeus rising 4.5 percent and Alpha Bank up 3.9 percent.
Sources said Greece has won a concession from the European Central Bank that could help its top four lenders pass the asset quality review.
Among other sharp movers, German sportswear maker Adidas rose 2.5 percent after announcing a plan to buy back up to 1.5 billion euros (R22 billion) in shares over the next three years.
Shares in Europe's biggest online fashion retailer Zalando rose 12 percent in their debut on the Frankfurt exchange on Wednesday. - Reuters