European Stocks Likely To See Cautious Start

(RTTNews) - European stocks may edge lower on Friday, extending the previous session's sell-off, as investors turned risk-averse following strong performance in recent weeks. The Asian markets are declining sharply, tracking overnight declines on Wall Street and weak commodity prices.

China's official non-manufacturing Purchasing Managers' Index fell to 54.6 in December from 56.0 in November due to a slowdown in the construction and service sectors, a report from the China Federation of Logistics and Purchasing showed, increasing risk aversion.

Earlier this week, two measures of factory output indicated that overall expansion in China's vast manufacturing sector was moderating.

Hong Kong's Hang Seng index is losing 2.1 percent, China's Shanghai Composite is declining 1.3 percent, South Korea's Kospi dropped 1.1 percent and Australia's S&P/ASX 200 shed 0.3 percent. The Japanese market is closed for a public holiday.

In economic releases, mortgage approvals data from the U.K. is slated for release later in the day, with economists expecting approvals to increase to 69,700 in November from 67,700 in October.

The steady expansion of the British manufacturing sector suggests that the ongoing recovery will continue in the early months of 2014, Capital Economics UK Economist Samuel Tombs said. According to the economist, U.K.'s manufacturing production will likely grow by about 3 percent in 2014, boosted by the easing of both the credit constraints and the squeeze on households' real earnings, although overseas demand may remain relatively weak.

Across the Atlantic, trading sentiment could be influenced by remarks from a number of Federal Reserve officials, including Fed Chairman Ben Bernanke.

In domestic corporate news, French drinks company Rémy Cointreau SA announced that its Chief Executive Officer Frederic Pflanz has resigned, for personal reasons.

Anglo-Italian firm AgustaWestland said it remains committed to working with the Government of India to resolve the issues over the cancellation of the VVIP helicopter deal.

European stocks fell sharply on Thursday despite data pointing to continued recovery in the euro zone manufacturing sector. A bout of profit taking following recent sharp gains and some soft Chinese and French data weighed on the markets. The German DAX and France's CAC 40 fell about 1.6 percent each, while the U.K.'s FTSE 100 shed half a percent.

U.S. stocks also kicked off the New Year in the red as traders cashed in on the recent strength in the markets. On the economic front, weekly jobless claims fell for a second straight week and construction spending rose in line with economist estimates in November, while there was a slight slowdown in the pace of manufacturing sector growth in December after six straight monthly gains, separate reports showed. The Dow and the tech-heavy Nasdaq fell about 0.8 percent each, while the S&P 500 dropped 0.9 percent.