European stocks close flat on Monday

Europe's main stock markets ended largely flat on Monday as traders fretted ahead of the European Central Bank's meeting this week after mixed economic data. Frankfurt’s DAX 30 edged up 0.07 per cent to close at 9,950.12 points. London’s FTSE 100 index of top companies ended up 0.29pc to 6,864.1 points, while the CAC 40 in Paris shed 0.08 pc to 4,515.89 points. The European stocks shrugged off early gains after data from Markit Economics released on Monday revealed that its Eurozone Composite PMI for May fell to a 6-month low of 52.2. Activity in Germany’s manufacturing sector slowed more sharply than expected while France, the eurozone’s second-largest economy which is struggling to boost growth, was the weakest of the economies surveyed. Later on Monday the European Commission, the EU’s executive arm, warned France that its efforts to fix its public finances were falling short of expectations and said it will remain under close supervision. Paris has promised 50 billion euros of budget cuts and reforms to reduce its budget deficit to within the EU’s target of 3.0pc of gross domestic product, but European Commission head Jose Manuel Barroso said that was still ‘only partly in line with the requirements’. Meanwhile inflation in Germany, Europe’s biggest economy, slowed to 0.9 pc last month, its lowest rate in 4 years in May, adding to pressure on the ECB to act to stop the bloc falling into deflation. Christian Schulz at Berenberg said the figures were ‘probably washing away the last ECB hold-outs against further policy easing’. ‘While the ECB looks set to cut interest rates and offer some lending incentives this week, we think much more will be needed to eradicate the risk of deflation,’ said Capital Economics, according to AFP.