London (AFP) - Most European stock markets closed lower Tuesday and London fell sharply after data showed that consumer inflation in the euro area fell in August and manufacturing activity began to soften.
In Asia earlier, stock prices had been buoyed in part by a survey of Chinese manufacturing that indicated a pick-up in activity, offering reassurance that the world's second biggest economy is recovering from the coronavirus pandemic.
But IG analyst Chris Beauchamp said caution was warranted ahead of US elections in November.
"With the US election now some eight weeks away there will be heightened expectations of renewed volatility," he predicted.
On Wall Street, the Dow Jones index was 0.3 percent higher in midday trading.
Signs of a pick-up in coronavirus infections around the world and a lack of movement on a new US stimulus package for the world's top economy also appeared to be keeping many buyers at bay.
On foreign exchange markets, the euro was mixed against major currencies on news that eurozone inflation slipped into negative territory in August for the first time since May 2016.
The EU's Eurostat data agency said the rate stood at negative 0.2 percent.
That marked a steep slowdown from a positive 0.4 percent in July and was even further from the European Central Bank's official target of close to but just under 2.0 percent.
The slowdown into deflationary territory comes despite historic stimulus measures by the ECB to push prices upwards and breathe life into the European economy.
Meanwhile, a key barometer of economic activity, the PMI purchasing managers' index, suggested that eurozone industrial growth began to run out of steam in August, economists at Oxford Economics noted.
The PMI index for Germany was revised sharply downwards and the index for France remained in contraction territory, Daniela Ordonez and Nicola Nobile said in an analyst comment.
Traders have now begun to focus on key US jobs data scheduled for publication on Friday.
The non-farm payrolls figures will provide a snapshot of activity that has struggled in recent weeks following the reimposition of virus containment measures to curb fresh outbreaks.
The weakness has not incited US lawmakers to push through a new rescue deal however, as Republicans and Democrats are still at loggerheads.
- Key figures around 1545 GMT -
London - FTSE 100: DOWN 1.7 percent at 5,862.05 points (close)
Frankfurt - DAX 30: UP 0.2 percent at 12,974.25 (close)
Paris - CAC 40: DOWN 0.2 percent at 4,938.10 (close)
EURO STOXX 50: FLAT at 3,273.28
New York - Dow: UP 0.3 percent at 28,504.01
Tokyo - Nikkei 225: FLAT at 23,138.07 (close)
Hong Kong - Hang Seng: FLAT at 25,184.85 (close)
Shanghai - Composite: UP 0.4 percent at 3,410.61 (close)
Euro/dollar: UP at $1.1949 from $1.1936 at 2100 GMT on Monday
Dollar/yen: UP at 105.95 yen from 105.91 yen
Pound/dollar: UP at $1.3424 from $1.3370
Euro/pound: DOWN at 89.02 pence from 89.28 pence
Brent North Sea crude: UP 1.2 percent at $45.82 per barrel
West Texas Intermediate: UP 1.3 percent at $43.16
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