Europe close: Tech stocks continue to sell-off, weak PMIs undermine support

It was a case of another session and another rally that fizzled out on Wednesday, with technology issues again under pressure on both sides of the Atlantic.

Making matters worse, Italian officials appeared to dig in their heels even as, across the Channel, investors grew more concerned regarding the political situation in London.

A very downbeat reading on euro area manufacturing and services sector activity for October did little to lift the mood.

Commenting on the mood in markets, IG's Chris Beauchamp said: "What started out as a good morning for Europe has fizzled out again, and it is the US session that is to blame. US equities are not displaying even the limited optimism that has been seen in Japan and Europe over the past 24 hours. They are able to hold the lows but not much else.

"Microsoft earnings (which were due out after the close of markets in London) might provide a tonic for sentiment, but until US traders decide that the time to buy the dip has arrived, everyone else’s efforts will be for naught."

By the close, the benchmark Stoxx 600 had erased an earlier bounce and was falling by 0.22% or 0.79 points to 355.27, alongside a 0.73% or 82.65 point fall to 11,191.63 for the German Dax while the FTSE Mibtel was off by 1.69% or 317.01 points to 18,485.46.

At the sector level, tech was weakest, with the Stoxx 600's sector gauge down by 1.85% to 406.74 amid the ongoing sell-off Stateside with top US central bank officials apparently unruffled by the recent correction in the stockmarket .

In parallel, euro/dollar was under water, falling 0.74% to 1.13861 while the yield on benchmark Italian 10-year BTP was up by one basis points to 3.60%.

To take note of, in remarks to RTL Radio, Italian deputy Prime Minister, Matteo Salvini, said of Brussels's rejection of his government's budget: "It's an attack on the Italian economy because someone wants to buy our companies on the cheap.

"If they keep giving slaps for no reason, I'll start to want to give more money to the Italian people."

Salvini also said Rome's budget proposals would stand even if the European Commission sent 12 letters.

Compounding matters, earlier IHS Markit's so-called 'composite' Purchasing managers' Index for Eurozone output in manufacturing and services for September had printed at a reading of 54.1 for September versus 52.7 in October - a 25-month low.

That was on the back of weaker-than-expected readings for factory activity in France and Germany as well as services in the latter.

It was also far weaker than the 54.0 reading the consensus had penciled-in, although the composite French output index did beat economists' forecasts.

The survey compiler blamed the export-led slowdown for the weak print, saying that it was continuing to spread out into services. Notably however, price pressures remained near seven-year highs.

Commenting on the data, Chris Williamson at IHS Markit said: "The survey will make for uncomfortable reading at the ECB. Although the survey's price gauges remain elevated and close to seven-year highs, the headline PMI has fallen to a level that would historically be consistent with a bias towards loosening monetary policy in order to prevent any further deterioration of economic growth."

On the corporate side of things, the market spotlight was on Deutsche Bank, which reported modestly weaker-than-expected third quarter revenues of €6.175bn and lowered its forecast for full-year sales, predicting a small decline.

Its shares finished the session just a smidgen above their previosu 52-week low.

For later in the session, investors were eyeing quarterly updates from US automaker Tesla and Wall Street tech darling chip-maker AMD, alongside those of Microsoft.