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Chinese manufacturing data sink Europe's stock market

LONDON/HONG KONG--European stock markets fell Thursday, reversing initial gains, as investors reacted to poor Chinese manufacturing data and took profits on the first trading day of 2014.

Financial markets also digested mixed news on the health of the eurozone's manufacturing sector.

In late morning deals, London's FTSE 100 index fell 0.43 percent to 6,719.82 points and the Paris CAC 40 sank 0.94 percent to 4,255.48 points, compared with the close on Tuesday — the final trading day of 2013 for both the British and French bourses.

Frankfurt's DAX 30 index declined 0.63 percent to 9,491.81 points compared with the close on Monday, when it last traded.

All three European markets reaped impressive gains in 2013, with London up 14.4 percent, Paris gaining 18 percent and star performer Frankfurt soaring 25.5 percent on global economic optimism.

U.S. shares gave a positive lead going into 2014, with investors in New York upbeat after a series of strong data indicating the world's top economy is getting back up to speed.

However, while the performance in New York provided a catalyst for buying, figures showing that factory activity in China had slowed weighed on sentiment.

On Wednesday, Beijing's official purchasing managers' index (PMI) for December came in at 51.0, down from November's 51.4 and below the median 51.2 forecast of eight economists by The Wall Street Journal. Anything above 50 points to growth while a figure below indicates contraction.

It marked the 15th straight month of growth, but it is the first time since June that the figure has dipped from the previous month.

And on Thursday, HSBC said its China PMI dipped to 50.5 last month from 50.8 in November.

The results raised concerns about the state of the world's number two economy — which is a key driver of regional and global growth — with analysts fearing it has slowed in recent months despite a pick-up in the middle of the year.

In contrast, manufacturing activity in the eurozone posted its strongest growth in 31 months in a fresh sign of recovery, though France remained a sore point, a key survey showed on Thursday.

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