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GLOBAL MARKETS-Equities drop after China data; euro zone growth lifts single currency

Published 30/04/2019, 09:19 pm
© Reuters.  GLOBAL MARKETS-Equities drop after China data; euro zone growth lifts single currency
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* Euro STOXX 600 .STOXX falls 0.1 percent

* Surveys suggest slower Chinese factory growth this month

* Euro zone GDP grows more strongly than expected

* Euro hits day's high on growth data

* German consumer price inflation data due at 1200 GMT

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Updates prices; adds euro zone GDP figures)

By Tom Wilson

LONDON, April 30 (Reuters) - European shares edged down on Tuesday after weak Chinese business surveys doused appetite for risk, while the single currency climbed after euro zone growth beat expectations.

Bourses in Britain, France and Germany lost ground after the surveys on China manufacturing missed forecasts, offering another sign that Beijing's efforts to spur growth in the world's second-biggest economy have yet to bear fruit.

Both official and private business surveys suggested slower Chinese factory growth this month, dashing hopes for a steady reading or even a faster expansion. Data also showed a slower expansion in China's services sector. figures underscored questions over prospects for the Chinese economy, with investors across the world already on edge over growing signs of a two-speed global economy where a robust United States outpaces its peers.

Just before noon the Euro STOXX 600 .STOXX was down 0.1 percent. British shares .FTSE were off 0.2 percent while the German .GDAXI and French .FCHI markets were flat and 0.2 percent down respectively.

Amid uncertainty on China's prospects, investors in Europe focused on data that could offer clues to the health of their own region's economy.

The euro EUR=EBS gained a quarter of a percentage point after figures showed growth in the euro zone grew more than expected in the first quarter, a fillip after poor manufacturing inflation data last month. consumer inflation data is due at 1200 GMT. Inflation in the regions of North Rhine-Westphalia and Bavaria nudged up, data released ahead of the nationwide figures showed.

Inflation in the euro zone is the key issue for the bloc's policymakers, said Michael Hewson, chief market analyst at CMC Markets.

"Unemployment is down, wages are starting to edge higher but inflation remains very subdued," he said. "That is the biggest problem for the European Central Bank in terms of its policy response in trying to lift demand in the euro area."

France earlier reported steady growth for the first quarter, while Spain's economy also grew faster than expected. economic data, corporate earnings were another major factor on Monday.

Chipmaker AMS AMS.S AMS.VI jumped 16 percent after beating forecasts for first-quarter profit. AMS is a supplier to Apple AAPL.O , which is due to report its results later.

Banks .SX7P dragged heavily on the STOXX 600. Danske Bank , DANSKE.CO hit by money-laundering scandals, fell more than 6 percent after lowering its outlook for 2019, while No. 1 euro zone bank Santander SAN.MC also slipped after a drop in first-quarter net profit.

In contrast, Standard Chartered STAN.L climbed 4 percent after unveiling plans for share buybacks of up to $1 billion, its first in at least 20 years. markets had fallen earlier on the Chinese data, albeit in thin trading. MSCI's broadest gauge of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 0.5 percent. Bourses in South Korea and Hong Kong also fell.

Japan's financial markets are closed this week as Japanese Emperor Akihito prepares to abdicate. Crown Prince Naruhito, Akihito's elder son, will take the Chrysanthemum Throne on Wednesday. world equity index .MIWD00000PUS , which tracks shares in 47 countries, ticked up 0.1 percent. Wall Street futures gauges were flat or marginally down.

BUNDS CLIMB

Germany's 10-year government bond yield rose to a one-week high after the positive euro zone growth data and regional inflation figures, breaking above zero percent. as the euro gained ground, FX traders were focused on whether European data would push currencies out of recent trading ranges.

Even marginal growth could squeeze speculators who have been amassing large short positions in the euro, worth a net $14.8 billion in the week to April 23. data offers some relief to traders, though it is still too early to say if the economic risks have completely lifted," said Commerzbank (DE:CBKG) FX strategist Esther Maria Reichelt.

Analysts had warned that markets could dial back predictions of an interest rate increase by the European Central Bank next year if the data was weak.

The Chinese data fuelled gains in Japan's yen JPY= , which rallied to a three-week high in holiday-thinned trading.

Against a basket of currencies .DXY the dollar was down 0.1 percent at 97.845 ahead of the U.S. Federal Reserve's two-day policy meeting, which ends on Wednesday.

The Fed is expected to leave interest rates unchanged as it seeks to balance robust economic growth against low inflation. commodity markets, oil prices rose 1 percent after Saudi Arabia said a deal between producers to withhold output could be extended beyond June to cover the whole of 2019.

Brent crude futures LCOc1 were last at $72.72 a barrel in late morning, up 0.9 percent. Reuters Live Markets blog on European and UK stock markets, please click on: LIVE/

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