London: European stocks fell on Wednesday following disappointing data released on the eve of a key eurozone interest rate call, with investors also nervous over pro-democracy protests in Hong Kong.
London`s benchmark FTSE 100 index slumped 0.98 percent to end the day at 6,557.52 points, Frankfurt`s DAX index shed 0.97 percent to 9,382 points and in Paris the CAC 40 tumbled 1.15 percent to 4,365.27 points.
Milan dropped 0.89 percent and Madrid gave up 0.67 percent.
"Markets didn`t get the first quarter off to the strongest of starts today," said CMC Markets UK analyst Jasper Lawler.
"The recent pull back in stock prices continued on signs that the US economy may be getting dragged down by slowing growth in other corners of the globe," he added.The euro retreated to $1.2613 from $1.2631 late Tuesday, hit partly by lacklustre eurozone manufacturing activity in September on the eve of the ECB decision.
The latest survey of leading indicators from manufacturing industries in the eurozone, the purchasing managers` index (PMI), gave a reading of 50.3 points, down from 50.7 points in August and the lowest for 14 months.
The data sparked speculation that ECB chief Mario Draghi could unveil fresh stimulus measures.
"Mario Draghi will be the centre of attention at the ECB meeting tomorrow with markets betting on him to reveal the extent of quantitative easing to be taken up," said dealer Amir Khan at traders CurrenciesDirect.
"The US dollar however continues to retain strength as last week`s GDP (gross domestic product) numbers were better than expected."
The euro had plunged on Tuesday to $1.2571 -- last seen in early September 2012 -- as eurozone inflation fell to a five-year low of 0.3 percent in September, signalling that the ECB may need more action to avert deflation.
In London on Wednesday, supermarket groups topped the FTSE 100 fallers board after Sainsbury posted weak first-half results.
Adding to the gloom, rival Tesco revealed that Britain`s Financial Conduct Authority regulator had launched a probe into the troubled supermarket chain after it massively overestimated its half-year profits forecast.
Shares in Sainsbury tumbled 7.0 percent to 234 pence and Tesco shed 3.2 percent to 180.20 pence, while peer Morrison dropped 5.0 percent to 159.90 pence.
On the eurozone bond market, French 10-year yields slid 1.242 percent, down from 1.285 percent on Tuesday despite a budget statement which took a gloomy view of the outlook for deficit reduction and economic growth.
Meanwhile, Germany placed 10-year bonds at the lowest yield ever, at less than 1.0 percent for the first time, at 0.93 percent.Asian equities also saw mixed fortunes, with Tokyo giving up earlier gains despite a surprise pick-up in business confidence and the dollar`s breaching of 110 yen for the first time since 2008 amid growing confidence in the US economy.
Tokyo stocks ended 0.56 percent lower and Seoul sank 1.41 percent, while Sydney added 0.78 percent.
Hong Kong and Shanghai were shut for public holidays but markets are keeping a nervous watch on the southern Chinese financial hub as a pro-democracy protest moves into its fourth day.
US stocks fell on mixed economic data.
While private-sector employment increased by more-than-expected 213,000 jobs in September, the Commerce Department reported that construction spending fell 0.8 percent in August while analysts had projected a 0.4 percent increase.
The Dow Jones Industrial Average slumped 1.02 percent to stand at 16,869.64 points in midday trading.
The broad-based S&P 500 slid 0.83 percent to 1,955.92, while the tech-rich Nasdaq Composite Index gave up 1.04 percent to 4,446.84.
The dollar meanwhile extended its run-up despite weak US indicators, climbing to 110.09 yen -- its highest since August 2008 -- as investors bet on an early rate rise by the US Federal Reserve as the economy picks up pace, while the Bank of Japan mulls easing measures to jumpstart growth at home.
However, it later pulled back to sit at 109.36 yen in London, against 109.64 yen late Tuesday.
The euro eased to 77.81 pence from 77.90 pence late on Tuesday, when it had hit a July 2012 low of 77.66 pence. The pound edged up to $1.6214 from $1.6213.
On the London Bullion Market, the price of gold finished unchanged at $1,216.50.
