Shares fall as key economic data approaches

LONDON/SINGAPORE, Feb 21 (Reuters) – European shares fell on Tuesday ahead of key data that will provide a window into the health of major economies, while the dollar hovered near a six-week high.

The euro zone, the UK, France and the US are all set to publish flash PMI data from February, with market participants watching for signs that tighter monetary policy has picked up activity.

In early trade, the Euro STOXX 600 (.STOXX) fell 0.2%, with major indexes in Germany, France and the UK opening slightly in the red.

The data comes at an important time for equity markets, whose strong start to the year after a bruising 2022 has ground to a halt in February.

“We are at a pivotal moment, where investors are thinking about restarting some positions,” said Francesco Sandrini, head of multi-asset strategies at Amundi. “These numbers are very important.”

Manufacturing activity in the eurozone is seen to decline in February, but at a slower pace than in the last five months. Service activity is estimated to have increased modestly.

German business activity returned to growth for the first time in eight months in February thanks to easing supply bottlenecks and improving underlying demand, the data showed.

The MSCI world stock index (.MIWD00000PUS), which tracks stocks in 47 countries, fell 0.2%.

US markets, closed on Monday for President’s Day, were set for small losses. E-mini futures for the S&P 500 were last down 0.5%.

Earlier, Asian shares also fell, weighed down by the prospect of the US central bank staying on its hawkish path.

MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) fell 0.9% to 529.97, falling below a six-week low of 529.05 last week.

Kicking off the round of PMIs was Japan, where manufacturing activity shrank at the fastest pace in 30 months in February as the world’s third-largest economy faces weakened demand and struggles to tame cost pressures.

The Nikkei (.N225) closed 0.2% lower.

DATA AND DOLLARS

The dollar index , which measures the US currency against six other rivals, was last at 104.11, just below a six-week high of 104.67 touched on Friday.

Meanwhile, the euro was down 0.2% at $1.067, and is set to snap four straight months of gains and end February lower.

Investor focus is also fixed on the release on Wednesday of the minutes from the Fed’s last meeting earlier this month when it raised interest rates by 25 basis points.

The market is now pricing US yields to peak at 5.30% in July and stay above 5% by the end of the year, moving away from expectations of deeper rate cuts this year. The yield on 10-year Treasury notes was up 2.3 basis points at 3.852%, after hitting a three-month high of 3.929% on Friday.

The yield on the 30-year Treasury note rose 1.1 basis points to 3.899%, while the yield on the two-year U.S. Treasury note, which usually moves in line with interest rate expectations, was up 3.5 basis points to 4.658%.

Oil prices fell as fears that a global economic slowdown would reduce fuel demand prompted investors to take profits on the previous day’s gains. Brent crude was last down 66 cents, or 0.8%, at $83.41 a barrel.

Reporting by Tom Wilson in London and Ankur Banerjee in Singapore; Editing by Shri Navaratnam, Himani Sarkar and Christina Fincher

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