European and Asian shares fall on weak manufacturing data from China

European and Asian shares fell on Wednesday as traders turned their attention back to economic data while the US House of Representatives prepared to vote on a debt ceiling bill.

Europe’s Stoxx 600 lost 0.3 per cent, Germany’s DAX 0.4 per cent, France’s CAC 40 0.6 per cent and London’s FTSE 100 0.3 per cent in morning trade.

Markets in the region were led by Asia, where China’s CSI 300 index fell 1 percent after China’s Bureau of Statistics reported a contraction in manufacturing activity in May, with analysts expecting an expansion.

Hong Kong’s Hang Seng China Enterprises index fell 2 percent, sending the benchmark down more than 20 percent from its recent peak in January and into bear market territory.

Preliminary data in France showed the country’s annual consumer price inflation dropped to 6 percent in May, the lowest level in a year, down from 6.9 percent the previous month.

The reading also fell below the 6.4 percent forecast by economists polled by Reuters, fueling hopes that the European Central Bank is nearing the end of its tightening cycle as price pressures ease quickly in the eurozone.

Germany and Italy are set to post their inflation results later in the day, with eurozone data due on Thursday.

Meanwhile, contracts tracking Wall Street’s benchmark S&P 500 slipped 0.3 and those tracking the tech-heavy Nasdaq 100 fell 0.4 percent from the New York open.

The moves follow choppy trading in the previous session, as traders worry whether Congress will manage to pass a US debt limit deal before the government runs out of money in early June.

The bipartisan bill, agreed on Saturday, would raise the country’s $31.4tn debt ceiling for two years, but it first needs to pass both chambers of Congress, traders said, up for a vote in the House of Representatives later on Wednesday. prepared.

The yield on US Treasury bills maturing next month – around the time the government could run out of money – rose to 5.4 per cent, but remained well below last week’s high. Bond yields rise as prices fall.

The pressure on longer-term Treasuries eased, with the yield on policy-sensitive two-year bills falling 0.04 percentage points to 4.43 per cent. The yield on the 10-year benchmark note fell 0.034 percentage points to 3.66 per cent.

Mike Zygmont, head of research and trading at Harvest Volatility, said: “With the bulk of credit limit risk off the table, it seems the market is paralyzed until this issue is settled legally. “