(MENAFN- AFP) European stock markets fell Thursday, reversing initial gains, as investors reacted to poor Chinese manufacturing data and took profits on the first trading day of 2014.
Financial markets also digested mixed news on the health of the eurozone's manufacturing sector.
In late morning deals, London's FTSE 100 index fell 0.43 percent to 6,719.82 points and the Paris CAC 40 sank 0.94 percent to 4,255.48 points, compared with the close on Tuesday -- the final trading day of 2013 for both the British and French bourses.
Frankfurt's DAX 30 index declined 0.63 percent to 9,491.81 points compared with the close on Monday, when it last traded.
"The rally witnessed in the past week has been subjected to profit-taking," said strategist Brenda Kelly at trading firm IG.
"Factory activity growth in China has blighted sentiment and helped to cap gains in equities. Both the official Chinese PMI number and the HSBC metric showed a slowing in the country's manufacturing sector in December."
All three European markets reaped impressive gains in 2013, with London, up 14.4 percent, Paris gaining 18 percent and star performer Frankfurt soaring 25.5 percent on global economic optimism.
On Wednesday, Beijing's official purchasing managers' index (PMI) for December came in at 51.0, down from November's 51.4 and below the median 51.2 forecast of eight economists by The Wall Street Journal. Anything above 50 points to growth while a figure below indicates contraction.
It marked the 15th straight month of growth but it is the first time since June that the figure has dipped from the previous month.
And on Thursday, HSBC said its China PMI dipped to 50.5 last month from 50.8 in November.
The results raised concerns about the state of the world's number two economy -- which is a key driver of regional and global growth -- with analysts fearing it has slowed in recent months despite a pick-up in the middle of the year.
"After a very positive start on the first trading day of the year, European markets have turned negative," added Varengold Bank analyst Anita Paluch.
"It seems the data out of China is setting the tone for the day -- manufacturing activity in the world's second biggest economy appears to slowdown."
In contrast, manufacturing activity in the eurozone posted its strongest growth in 31 months in a fresh sign of recovery, though France remained a sore point, a key survey showed on Thursday.
Markit Economics revealed that its Eurozone Composite Purchasing Managers Index (PMI) for December rose to 52.7 from 51.6 in November, the third consecutive monthly rise.
Germany, Italy and Spain recorded the strongest rises in output since early 2011 but France on the other hand saw a steepening downturn in part due to a fall in exports.
Asian equities began the new year mixed on Thursday, with another record-breaking close on Wall Street offset by the Chinese numbers.
Hong Kong stocks won 0.14 percent and Sydney added 0.29 percent, while Shanghai sank 0.31 percent and Seoul shed 2.20 percent.
Bangkok shares suffered the sharpest fall, plunging 5.23 percent as worries mounted about the country's political crisis following weeks of anti-government protests.
Tokyo and Wellington were closed for public holidays.
Turkish lira strikes fresh low
In foreign exchange trading on Thursday, the Turkish lira dived to yet another new low against the dollar, pressured by a corruption scandal rocking the government.
The lira fell to 2.1778 to the dollar while the main Istanbul stock exchange index lost 1.91 percent to 66,503.69 points.
Elsewhere, the European single currency declined to $1.3729 from $1.3753 late in New York on Tuesday. The dollar steadied at 105.36 yen.
The British pound hit a new two-year peak at $1.6603 -- the highest level since August 2011 -- buoyed by Britain's recovering economy.
The euro meanwhile eased to 82.96 pence from 82.98 pence.
Gold advanced to $1,220.61 an ounce from $1,201.50 on Tuesday on the London Bullion Market.
Wall Street gave a positive lead going into 2014, with investors upbeat after a series of strong data indicating the world's top economy is getting back up to speed.
The Dow added 0.44 percent and the S&P 500 gained 0.40 percent in Tuesday trade -- both new records -- while the Nasdaq rose 0.54 percent to hit its high for the year.
The Dow gained 26.5 percent in 2013 -- its best percentage rise in more than 15 years -- while the S&P 500 advanced 29.6 percent, marking its strongest jump since 1997.
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