EUROPE MARKETS: European Stocks Fall After Euro-zone, China PMIs

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- After three straight months of gains, European stock markets mostly dropped on Monday, with investors digesting a mixed round of purchasing managers' indexes from China and major euro-zone economies.

The Stoxx Europe 600 index slipped 0.3% to close at 324.10 after swinging between small gains and losses earlier in the session.

"This is one of those days where we find the pre-Christmas season starting to kick in. People are beginning to close down their trading and nobody wants to make any big moves ahead of the year-end," said Peter Dixon, strategist at Commerzbank in London.

"I think between now and the next three weeks we'll get a reasonable amount of volatility," he added.

Among major decliners, shares of ThyssenKrupp AG slid 8.5% after the steelmaker over the weekend said it found a buyer for its Alabama steel plant and that it plans a capital increase of up to 10%.

Mining firms were also among major losers, tracking losses for most metals prices. Shares of Fresnillo PLC declined 8.8%, Randgold Resources Ltd. fell 4.4% and heavyweight BHP Billiton PLC (BHP) lost 2%.

Among country-specific indexes, Spain's IBEX 35 index posted one of the biggest losses in Europe, down 0.9% at 9,745.50, after a weak reading on the country's manufacturing sector. The manufacturing PMI fell to 48.6 in November from 50.9 in October, signaling a decline in activity.

For the broader euro zone, the final manufacturing PMI rose to 51.6 in November, up from a flash estimate of 51.5. Output, new orders and new exports all expanded for the fifth successive month, but failed to halt the continuing slide in manufacturing employment, Markit said.

Data out of Germany showed orders for plant and machinery industry plummeted in October amid a sharp drop in demand from outside the euro zone, according to industry group VDMA.

Europe movers

Germany's DAX 30 index ended slightly lower at 9,401.96.

France's CAC 40 index fell 0.2% to 4,285.81 and the U.K.'s FTSE 100 index lost 0.8% to 6,595.33.

Shares of L'Oréal SA gained 1.7% in Paris after the cosmetics maker late Friday said it'll buy back as much as 500 million euros ($677 million) worth of shares.

Shares of Debenhams PLC slid 3.9% in London after Barclays cut the department store to underweight from equal weight.

Tesco dropped 2% after HSBC cut the supermarkets chain to underweight from neutral. The analysts said that a fall in margins is inevitable and a margin reset is necessary.

Italy's FTSE MIB index slid 1.5% to 18,732.56, weighed by shares of Saipem SpA , down 3%. The oil-field-services firm moved lower after J.P. Morgan Cazenove cut it to underweight from neutral, according to Dow Jones Newswires.

Investors in Europe also digested data from China, where HSBC's monthly survey of China's manufacturing sector came in at 50.8 for November, up from an initial estimate of 50.4 and almost unchanged from 50.9 the previous month. The result was largely in line with China's government-sponsored version of the PMI, which was unchanged from October. Asia stocks closed mixed.

In the U.S., stocks traded mostly lower after a stronger-than-expected reading on November manufacturing activity stoked worries the Federal Reserve will move to reduce its bond-buying program sooner than expected.

"Combined with stronger data lately for retail sales, building permits and initial jobless claims it raises the probability of Fed tapering already in December. If we get a close to 200,000 print as expected on U.S. employment on Friday the probability on December versus January tapering is 50-50 in our view," Allan von Mehren, chief analyst at Danske Bank, said in a note.

The U.S. nonfarm-payrolls report for November is out on Friday and economists surveyed by MarketWatch expect 180,000 new jobs to have been added to the economy.

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