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StockBeat - Weak PMIs, Brexit Risk Send Markets Tumbling

By Geoffrey Smith

Investing.com -- Europe’s stock markets are tumbling Friday morning after a shockingly weak survey from the German manufacturing sector increased suspicions that the euro zone’s slowdown could be deeper and longer than first thought.

IHS Markit’s flash purchasing managers index for Germany fell to 44.7 in March, its lowest in six and a half years and dashing hopes for a modest bounce after February’s reading of 47.6. The comparable figure for France, released earlier, had also fallen more sharply than expected to 49.8, below the 50 level that signals no change in activity. The flash reading for the euro zone fell to 47.6, well below expectations of 49.8.

As such, the euro zone’s manufacturing sector appears to have contracted in the first quarter, eking out only a small gain in January and shrinking in both of the following months.

At 05:00 AM ET (09:00 GMT), the benchmark Stoxx 600 was down 1.80 points or 0.5% at 378.90, while Germany’s Dax was down 0.6%, the French CAC 40 and the FTSE 100 were both down 0.8%.

The numbers come at a bad time for sentiment, after Thursday’s EU summit greatly increased the risk of a disorderly Brexit despite pushing back the March 29 deadline by two weeks. The brief extension still allows little time for the U.K. parliament to formulate an alternative course of action if – as is still likely – Prime Minister Theresa May fails to win approval for her Withdrawal Agreement.

Among individual stocks, Deutsche Bank (DE:DBKGn) had stood out before the PMIs with a trading update that forecast its first rise in revenue in years. However, it reversed after the data to be up only 0.7%.

The only other outperformers of note were again chipmakers, supported by the rally in U.S. tech stocks on Friday. Infineon (DE:IFXGn) was up 0.3%, while STMicroelectronics (PA:STM) was up 0.1% and U.K.-based software company Micro Focus (LON:MCRO) was up 1.4%

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