European stocks open lower on China slowdown concerns

European stock market were lower after the open on Monday, amid concerns over a slowdown in China and as emerging markets remained in focus, dampening demand for riskier assets.

Europe was given a negative lead from Asia, where Japan’s Nikkei 225 index tumbled 2% to hit a three-month low. The Nikkei is down over 10% since hitting a six-year peak of 16,320 on December 30, placing the index in technical correction territory.During European morning trade, the EURO STOXX 50 fell 0.35%, France’s CAC 40 shed 0.1%, while Germany’s DAX 30 declined 0.3%. Elsewhere, Spain’s IBEX 35 dipped 0.15% Italy’s FTSE MIB index inched down 0.2%, while in London, the FTSE 100 edged down 0.05%.

Data released earlier showed that China's official non-manufacturing PMI slipped to its lowest level since December 2008 in January, falling to 53.4 from 54.6 in December.

The deterioration in the services sector adds to declining manufacturing PMIs. Data released over the weekend showed that China’s official manufacturing PMI fell to a six-month low of 50.5 in January from 51.0 in December.

Meanwhile, market players continued to monitor liquidity conditions in emerging markets, such as Turkey and South Africa. Emerging markets economies have been hard hit in recent sessions by worries over the impact of cuts in Federal Reserve stimulus and concerns over a slowdown in China.

Financial stocks were broadly lower, as French lenders BNP Paribas and Societe Generale fell 0.8% and 1%, Deutsche Bank slumped 0.7%, while Italy’s Unicredit and Spain’s Banco Santander lost 1% and 1.5%.

In London, Lloyds Banking Group shares dropped 2.5% after the lender said it set aside GBP1.8 billion in the fourth quarter to cover the cost of compensating customers for mis-sold payment protection insurance.

Across the Atlantic, U.S. equity markets pointed to a steady open as investors looked ahead to key U.S. economic data later in the day for further indications on the future course of monetary policy.

The Dow Jones Industrial Average futures pointed to a flat open, S&P 500 futures signaled a 0.02% loss, while the Nasdaq 100 futures indicated a rise of 0.05%.

The U.S. Institute of Supply Management is to produce data on manufacturing activity for January later in the session, a leading economic indicator.