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Europe open: Stocks take breather despite robust German PMI

Wed 23 August 2017 08:30 | A A A

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(ShareCast News) - Equity markets are taking a breather following outsized gains in the previous session, stoked by optimism over the potential for US tax reforms.

As of 0836 BST, the benchmark Stoxx 600 was slipping by 0.09% or 0.35 points to 375.45, although Germany's Dax was ahead by 0.05% or 5.58 points to 12,233.97 and the Cac-40 by 0.09% or 4.57 points to 5,136.25.

Nonetheless, some analysts were rather sceptical regarding the prospect of any progress actually being made on Capitol Hill.

"Sadly we've seen this movie quite a few times this year with the hope that US politicians may well be poised to move forward with a program of tax reform, and for those hopes to subsequently turn to dust," commented Michael Hewson, chief market analyst at CMC Markets UK.

The day before, Politico had reported that top Trump administration officials and several key Republicans had reached a broad consensus on the best way to go about cutting both the individual and corporate tax rates.

Against that backdrop, investors were focusing on a very strong reading on the German economy.

IHS Markit's composite purchasing managers' index for France was steady at a reading of 55.6 in August (consensus: 55.4).

However, the equivalent PMI for Germany shot higher from 54.7 for July to 55.7 in August, far exceeding economists' forecasts calling for an unchanged print.

Still on the economic calendar for Wednesday, IHS Markit's August euro area 'composite' PMI was expected at 0900 BST, followed by a preliminary reading on consumer confidence in the single currency bloc at 1500 BST.

Later in the session, Markit's US manufacturing sector purchasing managers' index for August was set for release at 1445 BST with figures on new home sales due out at 1500 BST.

Meanwhile, on the corporate front, Brussels was aiming to complete its initial review of Bayer's takeover of Monsanto on Tuesday.

Air Berlin chief Thomas Winkelmann told Germany's Handelsblatt he was confident he would soon be able to deliver good news regarding talks with investors.

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