LONDON (AP) — Financial markets steadied Wednesday as a report showing China's manufacturing slump may be bottoming out helped offset the impact of more dire European economic news.
In Europe, few signs emerged of any economic improvement.
Government debt in the 17-country eurozone rose to 90 percent of the bloc's economic output at the end of the second quarter, according to official data. That's the highest in the currency union's 13-year history and up from the previous quarter's 88.2 percent.
The increase was due to a drop in economic growth and bodes ill for governments trying hard to reduce debt by means of tough tax hikes and spending cuts.
Meanwhile, a key survey of business activity, the so-called Purchasing Managers' Index published by financial data company Markit, fell in October to its lowest level in over three years. A measure of German business confidence also fell.
"Surveys worryingly indicate that the eurozone downturn is, if anything, deepening rather than easing," said Howard Archer, chief European economist at IHS Global Insight.
Offsetting the pain for markets, however, was a survey showing manufacturing activity in China contracting at a much slower pace in October.
HSBC Corp.'s purchasing managers' index for manufacturing rose to 49.1 points — a three-month high — from 47.9 points in September on a 100-point scale on which numbers below 50 indicate a contraction.
By late morning in Europe, Britain's FTSE 100 and Germany's DAX were both flat, at 5,800 and 7,175 respectively. France's CAC-40 was up 0.3 percent to 3,415.
The auto sector was in focus on Wednesday after France's PSA Peugeot Citroen said the government was offering it a €7 billion ($9.1 billion) lifeline. In return, the Socialist government is expected to demand a reduction in layoffs as well as the suspension in dividend payments. Shares in Peugeot were down 4.3 percent.
Volkswagen AG saw its shares rise 3.1 percent after it reported a 58 percent increase in its third quarter net profit. The company has strong sales in the U.S. and China but saw tougher markets in southern Europe due to the eurozone debt crisis.
Wall Street appeared set for gains a day after suffering sharp losses. Dow Jones industrial futures rose 0.1 percent while S&P 500 futures added 0.2 percent.
On Tuesday, stocks suffered big losses after some grim U.S. corporate reports. Big-name companies like Xerox and 3M reported lower revenue for the third quarter, while chemical maker DuPont said it will have to cut jobs and other expenses to make up for weak demand. UPS, the world's largest package-delivery company, warned that the pace of global growth remains uneven.
Earlier, in Asia, stocks showed some initial resilience but then faded.
Japan's Nikkei 225, after swinging between gains and losses, fell 0.7 percent to close at 8,954.30. Hong Kong's Hang Seng added 0.3 percent to 21,763.78. South Korea's Kospi lost 0.7 percent to 1,913.96.
Mainland Chinese shares were mixed. The Shanghai Composite Index rose 0.1 percent to 2,115.99 but the smaller Shenzhen Composite Index fell 0.4 percent to 866.45. Indian markets were closed for a holiday.
Benchmark oil for December delivery was up 18 cents to $86.85 per barrel in electronic trading on the New York Mercantile Exchange.
In currencies, the euro fell to $1.2945 from $1.2976 late Tuesday in New York.
Pamela Sampson in Bangkok contributed to this report.