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European shares drop, led lower by mining and travel stocks

Published 01/06/2016, 06:37 pm
Updated 01/06/2016, 06:40 pm
© Reuters.  European shares drop, led lower by mining and travel stocks
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(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details)

* FTSEurofirst 300, STOXX 600 down 0.4 pct

* Miners fall after mixed China PMI

* France leads tourism stocks lower after travel alert

* German PMI gives DAX a boost

By Alistair Smout

LONDON, June 1 (Reuters) - European shares fell on Wednesday, hit by a drop in commodity stocks and banks, while the travel sector was under pressure after the U.S. issued a travel alert over the possibility of attacks in Europe this summer.

The FTSEurofirst 300 .FTEU3 and STOXX Europe 600 .STOXX both fell 0.4 percent, extending falls from Tuesday's 0.8 percent drop.

The top sectoral faller was the STOXX 600 Basic Resources index .SXPP , which fell 2.3 percent. Mining companies led the sector lower after official and private surveys on China's manufacturing activity, which suggested the world's second-largest economy is still struggling to regain traction.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) showed activity at China's factories shrank for a 15th straight month in May. The official manufacturing May PMI painted a slightly more optimistic picture and stood unchanged from the previous month at 50.1 ECONCN .

"Overnight, China PMI figures were a mixed bag, with official figures showing marginal growth and unofficial indicating a slowdown," said Ana Thaker, Market Economist at PhillipCapital UK

"China has expressed a desire to move to a consumer led economy but these figures pose a problem for the country as it struggles to boost the non-manufacturing sector."

Oil and gas shares .SXEP also fell, down 0.6 percent, tracking a dip in oil prices.

The travel and leisure sector .SXTP fell 1.5 percent, among top sectoral fallers, after the United States warned of possible summer attacks in Europe, saying that major events, tourist sites, restaurants, commercial centers and transportation could all be targeted. tourism stocks led the sector lower. The industry is already being hit by strikes, and the Euro 2016 soccer tournament, starting next week, is seen as a major security challenge. expectation is that we will see a bit of a difficult summer, and the backdrop of that perception of an increased risk of attacks is certainly not helping," Chris Beauchamp, market analyst at IG, said.

Banco Popolare BAPO.MI led the banking sector lower. It fell 4 percent after media reports said Italy's market watchdog will give its go ahead to the bank's cash call later today.

Care company Elekta EKTAb.ST was the top STOXX 600 .STOXX faller, down as much as 7 percent after its first quarter earnings lagged. It also said that its performance in the first half in general would be weak. German stocks outperformed after an upbeat PMI survey showed that manufacturing growth hit a four-month high, in contrast to downcast readings from other euro zone nations such as France and Italy. DAX .GDAXI rose 0.1 percent, while the French CAC .FCHI and the Italian FTSE MIB .FTMIB fell 0.1 percent.

Today's European research round-up RCH/EUROPE

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA.

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