European Shares Set To Open Lower As China Optimism Fades

European stocks look set to open on a sluggish note Tuesday after markets in the U.S. were shut overnight for the Labour Day holiday.

Asian markets were broadly lower as mainland Chinese and Hong Kong stocks slipped after posting strong gains the previous day on news of China lowering down-payment thresholds for both first-time and second-time homebuyers.

Growth worries returned to the fore after a private-sector survey showed that China’s services activity expanded at the slowest pace in eight months in August amid sluggish demand.

Elsewhere, South Korea’s headline inflation accelerated at a faster-than-expected pace in August, keeping the door open for potential rate hikes.

The Reserve Bank of Australia held rates steady for a third month but flagged more increases.

In a speech in London on Monday, European Central Bank President Christine Lagarde avoided giving an indication of whether the central bank will raise or hold interest rates next week.

The dollar and Treasury yields were steady in Asian trade amid a dearth of important news.

Gold struggled for direction while oil prices held near nine-month highs on expectations of an extension in supply cuts into October.

Final Purchasing Managers’ survey results from the euro area and the U.K. are the top economic news due later in the day.

European stocks closed lower on Monday, giving up early gains on China stimulus optimism and hopes of Fed rate pause. The pan European STOXX 600 ended flat with a negative bias.

The German DAX edged down marginally, while France’s CAC 40 and the U.K.’s FTSE 100 both eased around 0.2 percent.

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