European stocks are set to edge lower on Monday after an official survey showed growth in China's increasingly important services sector expanded at its slowest pace in five months in February.
The non-manufacturing purchasing managers' index fell to 54.5 last month from 56.2 in January, a report released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing revealed. The slowdown in the pace of service-sector growth coupled with last week's worse than expected manufacturing data raised fresh concerns over sluggish growth in the world's second-largest economy.
China's Shanghai Composite index is tumbling 3.7 percent, dragged down by property developers after Beijing tightened mortgage rules to curb property speculation. Investors look ahead to this week's annual parliamentary meetings for further signs of property controls.
Benchmark indexes in Australia and New Zealand fell around 1.5 percent each, Hong Kong's Hang Seng index is down 1.6 percent and South Korea's Kospi average shed 0.7 percent on concerns over U.S. budget cuts and Italy's post-election political stalemate. About $85 billion in automatic cuts to both defense and domestic spending went into effect in the U.S. on Friday, with political parties blaming each other for the federal budget cuts, known as the sequester.
Japan's Nikkei index rose 0.4 percent, boosted by a weaker yen after prospective central bank governor Haruhiko Kuroda said he will do whatever is needed to lift Japan out of deflation.
The euro is weakening against the dollar ahead of a Eurozone finance ministers meeting in Brussels later in the day that would focus on talks to address the debt crisis in Cyprus. Eurozone's falling inflation and rising unemployment may put pressure on the European Central Bank to loosen its monetary policy, and the bank is expected to discuss an interest rate cut or other unconventional policies at next week's meeting, Capital Economics Senior European Economist Jennifer McKeown said.
In economic releases, producer prices and investor confidence data from Eurozone are due later in the European session. Across the Atlantic, investors will be looking for data on service sector activity, factory orders and the Federal Reserve's Beige Book report on regional economic conditions before Friday's jobs report.
In domestic corporate news, Porsche Cars North America Inc., a part of German auto maker Porsche AG, said that its U.S. vehicle sales in February increased 31 percent to 2,805 units from 2,149 units in the prior year.
British financial services firm HSBC Holdings Plc and peer Standard Chartered Plc are set to cut annual bonuses for their chief executives as well as senior executives while announcing their annual results, media reports suggest.
European stocks ended Friday's session mostly lower, as disappointing manufacturing data from the U.K. and China as well as rising unemployment in the euro area clouded the economic outlook. The Euro Stoxx 50 index of Eurozone bluechip stocks eased 0.6 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, slipped 0.4 percent. Around Europe, the German DAX fell 0.4 percent and France's CAC 40 shed 0.6 percent, while the U.K.'s FTSE 100 rose 0.3 percent and Switzerland's SMI edged up 0.1 percent.
U.S. stocks posted modest gains on Friday, as upbeat economic data on manufacturing and consumer confidence helped investors shrug off lingering worries about the impact of automatic government spending cuts. The Dow and the tech-heavy Nasdaq rose about 0.3 percent each, while the S&P 500 added 0.2 percent.
by RTT Staff Writer
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