European shares sink as China data derails hopes of Santa rally

LONDON (Reuters) – European shares were sharply lower in early trade on Friday as weak Chinese data renewed worries about the health of the world’s second-largest economy and potential damage from Washington’s protracted trade spat with Beijing.

The euro zone STOXXE .STOXXE index was down 1.4 percent at 0834 GMT with most bourses across the continent in the red.

The carmaker and auto supplier sector .SXAP was down 2.6 percent, the biggest loser in early deals while the technology sector .SX8P dropped 1.9 percent.

Germany’s DAX, which is particularly sensitive to global trade tensions and the Chinese economy, was the biggest faller amid pressure on retailers, banks and carmakers. Daimler (DAIGn.DE) was down 2.5 percent, among the biggest fallers.

Investors shunned equities after data showed China’s November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years as domestic demand softened further.

The world’s second-largest economy has been losing momentum in recent quarters as a multi-year government campaign to curb shadow lending put increasing financial strains on companies in a blow to production and investment.

The data dented European retailers and luxury goods companies which make a significant portion of their revenue in China.

The sector was also in focus after Hennessey, Moet and Louis Vuitton owner LVMH (LVMH.PA) announced plans to buy luxury hotel group Belmond (BEL.N) in a deal worth $3.2 billion. The shares were down 1.7 percent.

M&A dominated the headlines in general. German online classifieds company Scout24 (G24n.DE) soared 16 percent after the FT reported it’s exploring a sale that could see it taken private in one of the country’s largest leveraged buyouts in years.

GVC Holdings (GVC.L) hit the jackpot ahead of a UK parliamentary vote on legislation next week that Citi analysts say will remove a risk of a major cash outlay to former Ladbrokes shareholders.

The stock was up 7.1 percent, top of the FTSE 100.

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