European equities slip on eve of ECB rate decision

European shares slid Wednesday, after losses in Asia and overnight on Wall Street, as sentiment was soured by disappointing US data on the eve of an interest rate call from the European Central Bank. London's FTSE 100 index fell 0.53 percent to 5,641.91 points in morning deals, Frankfurt's DAX 30 shed 0.30 percent to 6,911.75 points and in Paris the CAC 40 dropped 0.57 percent to 3,379.80. Madrid handed back 0.47 percent and Milan lost 0.91 percent. In foreign exchange activity, the euro decreased to $1.2513, compared with $1.2564 late in New York on Tuesday. Asian and US markets retreated on Wednesday after a third straight monthly contraction in US manufacturing activity, which followed recent poor numbers on factory activity from Asia and Europe. Dealers meanwhile looked ahead to Thursday's European Central Bank meeting, with all eyes on president Mario Draghi for new measures to fight the stubborn debt crisis. "Mario Draghi's big day at the ECB might be only 24 hours away, but it is fears about the global economy that are taxing investors this morning," said IG Index analyst Chris Beauchamp. He added: "Yesterday's weak data from the US helped to give markets a shove lower, so today's fairly quiet day might provide some respite." Dealers have been broadly upbeat since Draghi in July hinted at a restart of its sovereign bond-buying programme to help under-pressure eurozone nations suffering high borrowing costs. And expectations were stoked on Monday after European lawmakers said Draghi had told them that buying government bonds of up to three-year maturity on the secondary market did not amount to bailing out spendthrift euro members. Such a move in the past was justified to help stabilise and protect the 17-nation eurozone, he said, according to the politicians. "There have been a number of stories circulating that Mario Draghi will announce a bond-buying programme which will target the debt of troubled countries with maturities of three years and below," said analyst David Morrison at trading group GFT. "The ECB president has said that this would be allowable under EU law and consistent with the ECB's price stability mandate. "However, even if he can launch such a programme in the face of opposition from the Bundesbank and others, many investors doubt that it will be enough to calm markets for long. "So, the stage is set for disappointment, and sellers are dominating the equity markets," Morrison added. In Asian stock market deals, Hong Kong closed down 1.47 percent, Tokyo sank 1.09 percent and Seoul slipped 1.74 percent, while Shanghai was off 0.29 percent. Sydney closed 0.57 percent lower after figures showed the Australian economy grew slower than expected in April-June. Dealers took their cue from Wall Street, which returned Tuesday after a long holiday weekend to figures highlighting the ongoing problems with manufacturing, a key driver of the world's biggest economy. The Institute for Supply Management said its purchasing managers index stood at 49.6 percent in August, down from 49.8 in July. A reading below 50 indicates contraction. It was the third month of contraction in a row. Data from the eurozone and Asia on Monday were similarly downbeat. China, a major global growth driver, saw its manufacturing activity fall to its lowest level in more than three years in August.