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European shares dip after mixed data

Paris - European shares dipped on Wednesday following mixed manufacturing data and as sales warnings from J Sainsbury and Nexans fuelled worries over the outlook for European corporate results.

Data showed German manufacturing activity shrank for the first time in 15 months in September as new orders dried up.

Overall, manufacturing growth in the eurozone slowed further in September as new orders contracted for the first time in over a year on dwindling demand at home and from abroad.

At 10:10, the FTSEurofirst 300 index of top European shares was down 0.2% at 1 377.44 points.

Spanish stocks outperformed, with Madrid's IBEX up 0.4%, after data showed the country's manufacturing sector expanded for the 10th straight month in September amid an economic recovery.

Greek banks featured among the top gainers in Europe, with Alpha Bank up 4.6% and National Bank of Greece up 4.3%, after sources said Greece has won an important concession from the European Central Bank that could help its top four lenders pass the asset quality review.

The weak data, coupled with Tuesday's figures showing a slowdown in eurozone inflation, will add pressure on the European Central Bank, said Barclays France director Franklin Pichard.

"Once again, the central bank will have to convince investors that it has the firepower to stave off deflation risks. We'll wait for Thursday's ECB meeting before buying the market," he said.

Shares in French cable maker Nexans tumbled 8.6% after the firm said full-year revenue would be flat as sales dropped by around 4% on an organic basis in the third quarter.

Shares in British retailer J Sainsbury dropped 3.1% and hit their lowest level since 2008 after the group cut its full-year sales target and said its strategic review would include future dividend policy.

On the upside, German sportswear maker Adidas rose 3.9% after unveiling a plan to buy back up to €1.5bn in shares over the next three years.

Shares in Europe's biggest online fashion retailer Zalando rose 12% in their debut on the Frankfurt exchange on Wednesday.

Around Europe, UK's FTSE 100 index was down 0.5%, Germany's DAX index flat, and France's CAC 40 down 0.2%. The eurozone's blue-chip Euro STOXX 50 index was down 0.1%.

Indices have been retreating over the past two weeks, dragged by a flurry of sales and profit warnings from European companies as well as by growing concerns over the timing of the US Federal Reserve's expected interest rate hike next year.

"Since the Fed meeting on September 17, we've seen a 'risk-off' trade, with the fixed income market playing its role of 'safe-haven' while equities and commodities have been slipping in negative territory," said Gregory Raccah, head of quantitative strategies at YCAP Asset Management, in Paris.

"We've seen a rise in volatility across the board, although at this point there's no risk in the short term to see a big rise in the re-correlation of assets."

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