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European stocks drop on dismal U.S. data

European stocks dropped following a surprisingly weak U.S. manufacturing activity raised worries over the world’s largest economy

European stocks slid on Wednesday after unexpectedly weak U.S. manufacturing activity stoked worries over the world’s largest economy.

The pan-European Stoxx 600 fell 1.3% during morning trade, on course for its largest one-day fall for over two weeks, with basic resources stocks shedding 2.5% to lead losses as all sectors and major bourses traded in the red.

The moves came as investors reflected on weaker-than-anticipated economic data out of the U.S. and German economic research institutes slashing GDP growth forecasts for Europe’s largest economy.

U.S. manufacturing activity tumbled to lows not seen in over a decade, data published Tuesday showed, aggravating worries about a long-running trade dispute between Washington and Beijing.

High-level trade officials from the U.S. and China are expected to hold a fresh round of negotiations next week.

The world’s two largest economies have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

Leading German economic institutes on Wednesday revised down German GDP growth for 2019 from 0.8% to 0.5% and cut 2020 projections from 1.8% to 1.1%, citing a manufacturing slowdown and high downside risks resulting from the trade war and Brexit uncertainty.

In Europe, British Prime Minister Boris Johnson is expected to unveil his final Brexit offer to the European Union on Wednesday.

Early reports from the BBC indicated that the proposal will include extra customs checks, a bigger role for the Northern Ireland Assembly and a time limit for Northern Ireland’s different relationship with the EU, relating to the controversial Irish “backstop.”

Reuters has reported EU sources as suggesting that if the proposed deal is as reported, the EU will reject it.

Sterling traded down around 0.1% at 1.2235 at around 10:55 a.m. London time.

Shares of German business bank Grenke jumped 6.4% after a promising 9-month business update, while Carl Zeiss Meditec shares climbed 4.4% after the German medical technology company upgraded its guidance on stronger-than-expected sales.

British baker Greggs also gained 4% as investors looked to capitalize on its low share price following Tuesday’s plunge.

At the other end of the Stoxx 600, Finnish machinery company Metso fell 5.9% after its acquisition of Canada’s McCloskey International. British online broker Hargreaves Lansdown also saw its shares fall 5%.

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