Europe close: Shares fall on China, EZ survey data, Middle East tensions

(Sharecast News) - European shares closed lower on the first trading day of the year as downbeat manufacturing survey data from China and the eurozone, combined with worries over tensions in the Middle East, dampened investor sentiment.

The pan-regional Stoxx 600 index gave up early gains to close 0.11% lower at 478.51 with major bourses mixed. germany's DAX bucked the trend with a 0.11% gain.

!After an initial promising start to the day, stock indices mainly dropped into the red on heightened geopolitical tensions in the Middle East,", said Axel Rudolph, senior market analyst at online trading platform IG.

"Rallying yields as investors tempered their expectations around interest rate cuts this year and a 3% fall in Apple shares following a broker downgrade were enough to make most major bourses fall on the first trading day of the year. Tesla beat estimates for fourth quarter deliveries but EV maker Rivian missed its quarterly delivery expectations."

"Heightened tensions in the Red Sea - where US military intervention over the weekend prevented a Houthi attack on a container ship - and Iran sending a destroyer to the region provoked an initial 2% rise in the oil price and flight-to-safety flows into gold before both advances turned into nothing as investors turned their attention to money markets and yields instead."

In economic news, manufacturing activity in the eurozone declined for the ninth straight month in December, according to new figures released Tuesday by S&P Global and Hamburg Commercial Bank (HCOB).

The eurozone manufacturing purchasing managers' index (PMI) rose marginally to 44.4, from 44.2 in November. The consensus estimate was for an unchanged reading from the initial 'flash' estimate of 44.2.

According to the release, factory job losses extended into a seventh successive month, but finer details of the report showed that there were some improvements from November.

Two closely watched surveys covering China's manufacturing sector showed a divergence in economic activity in December, with official government figures pointing to a continued contraction and a Caixin Global report indicating a pick-up in growth.

The manufacturing purchasing managers' index (PMI) from the National Bureau of Statistics declined to 49 last month, from 49.4 in November.

In contrast, the Caixin manufacturing PMI rose to 50.8 from 50.7 in November, ahead of the consensus estimate pointing to a slowdown to 50.4. While growth remains marginal, this was the fourth positive reading in the past five months.

In equity news, shares in Maersk rose after the Danish shipping giant said it would suspend routes through the Suez Canal and the Red Sea, after a weekend attack on one of its ships in the region.

The company on Sunday paused all Red Sea sailings for 48 hours after Iranian-backed Houthis tried to board its Maersk Hangzhou vessel. In response, US military helicopters were scrambled and 10 militants were killed and their boats sunk.

Germany's Hapag-Lloyd was also up and also confirmed it would continue diverting its vessels away from the region, taking the longer route via the Cape of Good Hope.

Shares in chipmaking equipment manufacturer ASML fell after the company was ordered by the Dutch government to restrict the shipment of some of its exports to China, prompting Beijing to urge the Netherlands to "respect market principles".

Reporting by Frank Prenesti for Sharecast.com