Europe open: Stocks off to a weak start in August

(Sharecast News) - The month of August got off to a soft start for European stocks following the release of weaker-than-expected factory survey data out of China. Against that backdrop, the pan-European Stoxx 600 was edging up by 0.12% to 471.35p, but all the main national indices were lower.

Germany's Dax was off by 0.6% to 16,347.41 and Spain's Ibex 35 by 0.62% to 9,581.80.

The euro and Brent crude oil futures were weaker alongside, although 10-year Bund yields were trading up by one basis point to 2.503%.

Overnight, survey compiler Caixin reported that its closely followed manufacturing sector Purchasing Managers' Index fell from 50.5 points for June to 49.2 in July (consensus: 50.1).

"The Politburo has signalled that China will refrain from major demand stimulus in H2 [...] This limited policy support means that China's recovery probably will continue to be "tortuous", uneven and drawn out," said Duncan Wrigley, Chief China+ economist at Pantheon Macroeconomics.

China was a key export market for Europe, especially Germany.

Not lost on investors either was the Reserve Bank of Australia's decision not to raise rates which surprised economists.

Euro area manufacturing fared even worse in July, S&P Global said, as it confirmed that the HCOB factory PMI declined from 43.4 in June to 42.7.

"It looks like the manufacturing recession is here to stay in the eurozone," Hamburg Commercial Bank chief economist, Dr.Cyrus de la Rubia, said.

"Stronger declines in output, new orders and purchase volumes at the start of the third quarter back up our view that the economy as a whole is in for a bumpy ride in the second half of the year."