Europe close: Stocks rise despite soft data

(Sharecast News) - European shares were mostly higher on Tuesday even as investors digested eurozone business activity data and a cut in China's credit rating to 'negative' from 'stable' by Moody's. The pan-European Stoxx 600 index was up 0.4% to 467.62 with major regional bourses higher alongside, save for the FTSE 100 which gave back 0.31%.

Economic activity in the eurozone continued to shrink in November despite the closely watched composite purchasing managers' index (PMI) rising to a four-month high.

The S&P Global ad Hamburg Commercial Bank (HCOB) eurozone composite PMI Output Index recorded its sixth straight sub-50 reading last month, indicating a contraction in activity, data revealed on Tuesday.

The composite PMI, which combines activity in both the manufacturing and services sectors, was revised up to 47.6, its highest since July and up from October's 35-month low of 46.5.

Industrial producer prices in the eurozone increased by 0.2% in October, according to data released on Tuesday by Eurostat, in line with analysts' forecasts.

On the China front, Moody's said its cut reflected the risks related to its persistently lower medium-term economic growth and ongoing downsizing of the property sector.

The ratings agency expects China's annual GDP to come in at 4% in 2024 and 2025 and average 3.8% between 2026 and 2030. Predictably, China's finance ministry said it was disappointed by the downgrade and called Moody's concerns "unnecessary".

"China has struggled with a bumpier than expected post covid recovery. It has been grappling with weak demand, an embattled property sector, declining imports and exports, and heavy debts from long-term infrastructure spending," said Interactive Investor analyst Victoria Scholar.

"The government has stopped publishing youth unemployment figures, after they hit a record high in the summer. While the authorities have been attempting to bolster demand through stimulus measures, more needs to be done to support the world's second largest economy particularly amid the backdrop of sluggish global demand."

In equity news, shares in Barclays fell after Qatar Holding moved to sell around £510m in stock.

Telecom stocks were in focus, with Ericsson up after striking a deal with AT&T to build a major telecom network using ORAN technology, while Nokia plunged 5.9% on losing more supplier work to Ericsson.