(MENAFN- AFP) Europe's main stock markets retreated on Thursday as investors digested weak Chinese economic data and a cautious outlook from European Central Bank chief Mario Draghi.However, the euro rallied on news that activity in the eurozone private sector economy hit a 31-month high in January as recovery gathered pace.In afternoon deals, London's FTSE 100 index of top companies slid 0.26 percent from Wednesday's closing level to 6,808.85 points.Frankfurt's DAX 30 index fell 0.60 percent to 9,661.86 points and the Paris CAC 40 index dropped 0.75 percent to 4,292.63."Weakness for European equity markets this Thursday morning, as an unexpected contraction in the Chinese manufacturing activity and a warning from the ECB President Mario Draghi against undue optimism surrounding the eurozone economic recovery, weighs on investors' sentiment," said ETX Capital trader Ishaq Siddiqi.Draghi made the comments to Swiss daily Neue Zuercher Zeitung."We see some encouraging signs but the recovery in the euro area is still weak and uneven," the ECB chief told the newspaper."All in all, the risks are still on the downside. So I would be cautious about becoming overly optimistic."We are now at a stage like that of the US a year and a half ago. The survey data are strong, but we don't yet have a continuous stream of strong hard data. That's a familiar pattern in economic recoveries after a deep crisis."In foreign exchange activity, the European single currency jumped to $1.3666 from $1.3544 in New York late Wednesday, after Markit Economics said its Eurozone Composite Purchasing Managers Index (PMI) for January rose to 53.2 points from 52.1 in December. Meanwhile the British pound dipped to 1.2157 euros from $1.2235, but rose to $1.6620 from $1.6569.Gold prices firmed to $1,244.25 an ounce from $1,241 on Wednesday on the London Bullion Market.In Turkey, the lira fell to about 3.11 to the euro and 2.29 to the dollar in morning trading but recovered to 3.0922 and 2.2674 in the early afternoon after the central bank intervened directly on the foreign exchange market for the first time for two years.The rise in the eurozone composite PMI was the seventh monthly increase running and the fastest rate of growth since June 2011. A number above 50 denotes expansion.The index is a leading indicator of how the economy is performing, and is closely watched because it is regarded as broadly accurate.In Paris, the head of automaker Renault, Carlos Ghosn, said that the prospect that Chinese state-owned carmaker Dongfeng might become a shareholder in French rival Peugeot Citroen was not a threat to Renault's partnership with Dongfeng.However Renault shares dipped 0.45 percent to 67.85 euros after Russia's Autovaz, which is being taken over by Renault-Nissan, said it would shed 7,500 workers, a tenth of its workforce, this year.Asian markets fallMeanwhile, Asian stock markets fell Thursday after data showed Chinese manufacturing activity shrank in January for the first time in six months.Investors were given a soft lead from Wall Street after uninspiring US corporate earnings.Tokyo retreated 0.79 percent and Sydney fell 1.07 percent, while Seoul lost 1.16 percent on news that South Korean economic growth slowed in the fourth quarter of 2013."Markets are trading cautiously ... following weak manufacturing data from China suggesting there may be a slowdown in growth in the world's second biggest economy," added Andy McLevey, head of dealing at broker Interactive Investor.US stocks also opened sharply lower Thursday, with the Dow Jones Industrial Average losing 0.84 percent to 16,232.62 points after five minutes of trading. The broad-based S&P 500 sank 0.68 percent to 1,832.29, while the tech-rich Nasdaq Composite Index declined 0.63 percent to 4,216.27.In London, shares in British publisher Pearson, owner of the Financial Times, plunged 8.5 percent to 1,199 pence after the company issued a shock profits warning.Pearson said that annual operating profit for 2013, before restructuring charges, would be sharply lower at about £865 million ($1.43 billion, 1.05 billion euros).Shares in EasyJet descended 3.3 percent to 1,685 pence after warning that interim losses would deepen because of the timing of the Easter holiday.
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