(MENAFN- AFP) Europe's markets slid on Tuesday but losses were capped as weaker-than-expected eurozone inflation data cemented expectations that the European Central Bank would implement monetary easing later this week, dealers said.
London's FTSE 100 index of top companies reversed 0.33 percent to stand at 6,841.66 points in midday trade.
Frankfurt's DAX 30 shed 0.26 percent to 9,923.66 and the Paris CAC 40 index fell 0.09 percent to 4,512.02 points.
Eurozone inflation slowed sharply to 0.5 percent in May, down from a record 0.7 percent in April, official data showed Tuesday.
The level is the same as in March, which was the lowest since the worst months of the financial crisis in 2008 and 2009.
Inflation in the 18-nation eurozone has fallen steadily in the past year, reflecting weak demand, stoking hopes of a rate cut on Thursday.
"The European Central Bank is now under pressure to deliver significant policy loosening," said economist Azad Zangana at investment firm Schroders.
"The market expects at least a cut in the main policy interest rate, along with a cut to the deposit rate."
Inflation is way below the ECB's target of 2.0 percent and shows little sign of picking up any time soon.
"May's fall in eurozone inflation and the still high level of unemployment in April will add to the pressure on the ECB to provide more policy support in order to address the growing risks of deflation in the single currency area," added Capital Economics analyst Jennifer McKeown.
In foreign exchange deals, the euro rose to $1.3610, down from $1.3595 late in New York on Monday.
The European single currency eased to 81.15 British pence from 81.19 pence.
The British pound increased to $1.6772 from $1.6745 on Monday.
The price of gold dipped to $1,247.08 an ounce from $1,247.25 on Monday on the London Bullion Market.
Asian equities mostly rose, taking their cue from another record close on Wall Street following improved manufacturing data in the United States and China.
Tokyo closed up 0.66 percent, Seoul rose 0.33 percent and Hong Kong closed 0.91 percent higher, while Sydney fell 0.70 percent and Shanghai edged down 0.04 percent.
Investors have taken heart from improved manufacturing output in the world's two largest economies.
On Tuesday, HSBC said manufacturing activity in China improved in May. The bank's purchasing managers index (PMI), which tracks activity in the nation's factories and workshops, came in at 49.4 in May.
The figure was lower than a preliminary reading of 49.7 but improved from 48.1 in April and the highest reading since January's 49.5.
PMI data is a closely watched indicator of the health of a country's economy, and a reading above 50 indicates growth.
In the United States, the Institute of Supply Management said on Monday that its purchasing managers index of US manufacturing activity rose in May to 55.4 from 54.9 in April, rather than slowing to 53.2 as it first reported.
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