European stocks lag amid manufacturing sector slump

The FTSE 100 closed 33.14 points lower, or 0.43%, at 7,666.27.

European stocks lagged on Tuesday as the UK and Germany’s manufacturing sector slumped (Rui Vieira/PA) (PA Wire)

European stocks lagged on Tuesday amid new data showing the UK and Germany’s manufacturing sector slumped last month, as the sector feels the impact of waning demand.

London’s FTSE 100 started the month on the downturn after gaining about 2.2% during July, its best month since April.

The top index was weighed down by losses for insurers, miners, and some banking stocks, and not offset by gains for HSBC.

It came after UK manufacturers saw the joint-worst performance since May 2020, and the 12th month of decline for the sector, according to the influential S&P Global/CIPS UK Manufacturing PMI survey.

The index closed 33.14 points lower, or 0.43%, at 7,666.27.

Meanwhile, it was a heavier day of losses for other European stock markets after a similarly weak performance for Germany’s manufacturing sector dampened the mood among investors.

Germany’s top stock index, the Dax, sank by 1.26% and France’s Cac 40 also fell by 1.22% on Tuesday.

Chris Beauchamp, the chief market analyst for IG, said: “Hopes of a sustained rally in the FTSE 100 have been dashed too, though at least BP hasn’t been the drag on performance in the manner of Shell last week.

“But if the weakness in German data begins to spread then we could see August live up to its reputation as an unpropitious month for stocks, even if equities do continue to gain into the end of the year.”

Across the pond, it was a slow start to trading in the US with the S&P 500 down 0.3% and Dow Jones flat by the time European stock markets closed.

The pound was down 0.7% against the US dollar to 1.2727, and down 0.4% to 1.1619 against the euro.

The price of Brent crude oil fell by 0.84% to 84.71 US dollars per barrel.

In company news, fast food outlet Greggs saw its shares drop to the bottom of the FTSE 250 after it revealed its half-year results.

The company’s shares fell 7.2% as investors were seen taking profits from the business, whose shares are still up by more than 7% since the start of the year, despite Tuesday’s fall.

Greggs said that its sales were up 21.5% to £844 million during the first six months of the year. It said that customers had bought more of its goods and it had hiked prices, helping to boost its revenue.

It also added another 50 shops to its estate of more than 2,300 during the period.

Shares in banking giant HSBC peaked at a four-year high on Tuesday after announcing bumper profits and a big share buyback.

Pre-tax profit reached 21.7 billion US dollars (£16.9 billion) in the first half of the year, more than 2.5 times higher than the same period a year ago.

The business also said that it now expects to make more net interest income this year than it had previously forecast as interest rates rise around the world.

The biggest risers on the FTSE 100 were Weir Group, up 39.5p to 1,874.5p, Rightmove, up 10.2p to 580.6p, Centrica, up 1.9p to 139.95p, HSBC, up 8.6p to 654.9p, and Auto Trader, up 5.4p to 651.4p.

The biggest fallers on the FTSE 100 were Beazley, down 28p to 520.5p, Fresnillo, down 27.2p to 591p, JD Sports, down 4.45p to 153.25p, Endeavour Mining, down 50p to 1,830p, and NatWest Group, down 6.1p to 238.2p.