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Europe: Weak US, euro zone data push shares lower

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European shares ended a three-day winning streak on Tuesday as investors were gripped by growth worries after poor US manufacturing data fanned fears of slowing growth in the world's largest economy.

[BENGALURU] European shares ended a three-day winning streak on Tuesday as investors were gripped by growth worries after poor US manufacturing data fanned fears of slowing growth in the world's largest economy.

The pan-European Stoxx 600 index touched session lows, and closed down 1.3 per cent after data showed US manufacturing contracted for the second month in September, knocking US stocks.

This followed on from euro zone data that showed manufacturing activity contracting at its steepest rate in almost seven years.

Given that economic indicators in the euro zone have been weak recently, the US data is a bigger disappointment for investors because growth in the US economy was expected to rebound, said Hubert de Barochez, a markets economist with Capital Economics.

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All major sectors in Europe moved well into the red after the data. German and French stocks lost more than 1 per cent each.

Losses in London's FTSE 100 were limited by a drop in the pound ahead of UK Prime Minister Boris Johnson's presentation of proposals for an amended Brexit agreement. A weakness in the sterling tends to bode well for exporters in the index.

Adding to the gloomy mood, stocks with exposure to Hong Kong and Asia, such as Standard Chartered, HSBC, Louis Vuitton owner LVMH lost between 0.8 per cent and 2.5 per cent.

These stocks have been under pressure since early summer as pro-democracy protests have stretched into four months. But they lost ground on Tuesday after reports that a protestor in Hong Kong was hit by a police bullet.

Healthcare stocks also slid, with shares of AstraZeneca down 1.7 per cent after the US Food and Drug Administration denied approval to the smoker's lung treatment developed by the drugmaker.

British baker Greggs slid 12.5 per cent to the bottom of the Stoxx 600 after it reported slower quarterly sales growth and warned of rising cost pressures.

Airlines were bright a spot with Ryanair, International Consolidated Airlines and Air France-KLM rallying after Bank of America Merrill Lynch reinstated a "buy" rating on the stocks and gave a positive outlook for the sector.

These gains plus comments from US trade adviser Peter Navarro, who dismissed reports the White House could seek to force Chinese companies to delist from U.S. exchanges, had helped the pan-region index touch a two-month high in early trade, before it turned to losses.

The Stoxx 600 gained around 2 per cent in the third-quarter compared to 12 per cent in the first three months of this year, as the US-China trade war worsened economic prospects and slowed a global stocks rally that dates back almost a decade.

REUTERS