Europe open: Stocks shrug off early losses to trade flat as investors digest China data

LONDON (ShareCast) - (ShareCast News) - European stocks shrugged off opening losses to trade flat as investors digested disappointing Chinese manufacturing figures and mixed data out of France and Germany. At 0850 BST, the benchmark Stoxx Europe 600 index was up 0.1%, while France's CAC 40 and Germany's DAX were both unchanged.

According to data released on Wednesday, the slowdown in China's manufacturing sector accelerated moderately in September, although some economists were wary of reading too much into the latest figures.

Caixin's preliminary Chinese manufacturing sector purchasing managers' index for September dipped to a reading of 47.0 - a six-and-a-half year low - down from a print of 47.3 for August.

The median projection from economists had been for a reading of 47.5.

"This will just serve as affirmation of a troubled and slowing China and support the Fed's decision to hold interest rates at historic lows based on concerns related to growth in China, Emerging markets and globally," said Mike van Dulken, head of research at Accendo Markets.

Auto stocks were under pressure again as the Volkswagen (Other OTC: VLKAF - news) emissions scandal gathered pace. According to press reports, a panel of senior supervisory board members at the German car maker will meet on Wednesday to discuss allegations by US authorities that it rigged emissions tests.

And it seems VW's woes will have much wider repercussions, as Deutsche Bank (Other OTC: DBAGF - news) cut its 2015 and 2016 year-end targets for the DAX to adjust for news flow on the car maker.

The bank pointed out that news about VW's legal case on emissions in the US has erased DAX Autos' market cap by 15% in just two days, which it said was a "huge headwind" to its current view on the DAX, given the sector's 35% earnings per share and 25% market cap contribution to the German blue chips index.

Elsewhere, German media holding company Axel Springer SE (Other OTC: AXELF - news) was in focus following reports that it's in advanced talks to buy Business Insider in a deal that would value the US digital publisher at around $500m.

Swiss Re (Xetra: A1H81M - news) nudged just a touch lower after announcing that its business unit Admin Re has agreed to acquire Guardian Holdings Europe Limited, the holding company for operations trading under the name Guardian Financial Services, from Cinven for £1.6bn.

In London, diversified engineering company Smiths Group (Other OTC: SMGKF - news) rose after posting a 3% increase in full-year pre-tax profit, despite a decline in revenue. The company also named Andrew Reynold Smiths as its new chief executive, with current CEO Philip Bowman stepping down at the close of business on 24 September.

Brewer Diageo was on the back foot. The company said the year had started well and performance was in line with its expectations, but warned that adverse exchange rate movements will hit 2016 operating profits by £150m as demand for premium spirits is impacted in emerging markets.

Data released earlier showed private-sector activity in France bounced back in September. The preliminary reading of the Markit Purchasing Managers Index for manufacturing rose to 50.4 from 48.3 in August, beating expectations for a reading of 48.5. The services PMI increased to 51.2 from 50.6.

Germany's manufacturing PMI for September missed forecasts, however, falling to 52.5 from 53.3 in August. The services PMI nudged down to 54.3 from 54.9.