European, US stocks waver on economic gloom

Oil prices slid on fears of more painful Covid lockdowns in China. ©AFP

London (AFP) - European and US stock markets wavered Wednesday on news that the eurozone and UK economies shrank in November but by less than the previous month.

In mid-afternoon trading, Frankfurt equities fell 0.1 percent and London won 0.2 percent, while Paris and New York flatlined.

Oil prices slid on fears of more painful Covid lockdowns in China that could ravage the Asian giant's energy demand.

The eurozone's composite purchasing managers index (PMI), a key economic indicator, improved from 47.3 in October to 47.8 in November, S&P Global said.

However, activity languished under 50 -- signifying the fifth consecutive month of economic contraction as inflation spikes.

Britain's composite PMI was also fractionally higher, from 48.2 to 48.3 in November, but that marked the fourth straight contraction.

'Recession is inevitable'

The news comes after the UK government recently confirmed that the nation's economy was in recession, with inflation sitting at a 41-year high.

"Both data suggest that recession is inevitable in both eurozone and UK economies, with the UK likely to be designated officially before the eurozone due to the weaker Q3 data," Monex Europe analyst Maria Marcos told AFP.

"Despite the early volatility, all indices across the eurozone currently sit close to their opening levels, suggesting that the positive surprise in the data wasn't enough to provide good news for investors."

Elsewhere, Asian stocks rose on hopes that the Federal Reserve will carry out smaller US rate hikes at its next few meetings after inflation cooled in the world's biggest economy.

But there is growing concern that a surge in China's Covid-19 cases will see officials impose more economically-damaging restrictions.

Traders were also keeping tabs on protests at the world's largest iPhone factory in China as Foxconn workers grow increasingly angry at the country's long-running Covid curbs.

The US dollar sank more than one percent against the British pound as investors also mulled mixed earnings and economic data, while the euro steadied against the dollar and yen.

"An economic slowdown is expected to weigh on inflation, reducing the need for the Fed to maintain an aggressive tightening stance," said City Index analyst Fawad Razaqzada.