Volkswacht Bodensee - Global stocks fall after weak China data ahead of key US debt vote

Bourses in London, Paris, Frankfurt and Tokyo all fell at least one percent.

Indices in New York also declined, but not by as much.

China's manufacturing activity shrank in May for the second successive month, official figures showed, the latest sign that the country's economic recovery is losing steam.

The drop "indicates the economic recovery faces challenges", said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

They include a cooling property market and a burgeoning second wave of Covid-19 that has weakened domestic demand, Zhang said.

Meanwhile, inflation in Europe's biggest economy Germany slowed more than expected in May, a pattern also seen in neighboring France.

European Central Bank officials greeted the drop, while warning that the battle against high prices was not over yet.

In a separate report published on Wednesday, the ECB warned that the higher interest rates were starting to bite.

Although economic conditions have "improved slightly" as energy prices have fallen, higher borrowing costs and stricter credit conditions "are testing the resilience" of euro area firms and households, the twice-yearly Financial Stability Review said.

"The outlook for euro area financial stability remains fragile," the report added.

Investors are hopeful that the United States can avert a debt default following the passage of a compromise package late Tuesday in a key House committee, a development expected to foreshadow full House approval on Wednesday evening.

"Optimism about the US avoiding a catastrophic default on debt is growing following the House Rules Committee approving a bill based on a debt-ceiling compromise spearheaded by President Joe Biden and House Speaker Kevin McCarthy," said Jose Torres, senior economist at Interactive Brokers.

Fresh US data on the lofty amount of job openings added to concerns the Federal Reserve will continue to lift interest rates in June.

Those worries were countered by comments from two senior Fed officials to skip an increase at the next meeting.

"I am in the camp increasingly coming into this meeting thinking that we really should skip not pause -- I don't like the word 'pause' -- but skip an increase," said Philadelphia Fed president Patrick Harker.

- Key figures around 2030 GMT -

New York - Dow: DOWN 0.4 percent at 32,908.27 (close)

New York - S&P 500: DOWN 0.6 percent at 4,179.83 (close)

New York - Nasdaq: DOWN 0.6 percent at 12,935.29 (close)

London - FTSE 100: DOWN 1.0 percent at 7,446.14 (close)

Paris - CAC 40: DOWN 1.5 percent at 7,098.70 (close)

Frankfurt - DAX: DOWN 1.5 percent at 15,664.02 (close)

EURO STOXX 50: DOWN 1.7 percent at 4,218.04 (close)

Tokyo - Nikkei 225: DOWN 1.4 percent at 30,887.88 (close)

Hong Kong - Hang Seng Index: DOWN 1.9 percent at 18,234.27 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,204.56 (close)

Euro/dollar: DOWN at $1.0695 from $1.0735 on Tuesday

Dollar/yen: DOWN at 139.30 yen from 139.79 yen

Pound/dollar: UP at $1.2442 from $1.2414

Euro/pound: DOWN at 85.93 pence from 86.47 pence

Brent North Sea crude: DOWN 1.2 percent at $72.66 per barrel

West Texas Intermediate: DOWN 2.0 percent at $68.09 per barrel

burs-jmb/caw

F.Pavlenko--BTB