European stocks slip at start of week

Europe's main stock markets have made a downbeat start to the week after investors took profits, waited for more US earnings and economic data, and dwelled on weak Chinese growth figures, dealers say.

London's FTSE 100 benchmark index of leading shares on Monday fell 0.28 per cent to 5,650.23 points, Frankfurt's DAX 30 index shed 0.29 per cent to 6,537.76 points and in Paris the CAC 40 sank 0.41 per cent to 3,167.91.

In foreign exchange deals, the European single currency dipped to $US1.2215, from $US1.2248 late in New York on Friday, when it struck $US1.2163 - the lowest level since June 29, 2010 - on eurozone debt crisis concerns.

However, European equities had advanced on Friday on new prospects of Chinese economic stimulus measures owing to weak growth data, while Italy managed to pull off a bond auction despite a ratings downgrade.

"After having ended the week on a fairly strong note on Friday, European equity markets are trading little changed this morning with no major developments and news over the weekend to report," said ETX Capital trader Markus Huber.

"With very little economic data scheduled for release ... equity markets are expected to mostly remain range-bound."

He added: "Some might consider Friday's move to the upside somewhat overdone and partially caused by short-covering ahead of the weekend."

The FTSE's biggest loser on Monday was G4S. Shares dived by as much as 10 per cent after the security group warned that its failure to provide enough guards at the London Olympics would cost up to STG50 million ($A76.52 million).

In late morning deals, the company's share price stood at 254.7 pence, down 8.61 per cent from Friday's closing level.

Later on Monday, meanwhile, investors will focus on the latest company earnings and economic data across the Atlantic.

"All eyes will be on US retail sales expected to show a moderate rebound after last month's decline, overall however with job growth continues to be meagre and economic growth sluggish at best consumers are likely to remain cautious and unwilling to undertake any major spending sprees," added Huber.

"Today it is Citigroup's turn to report earnings potentially giving markets another boost with earnings from JPMorgan and Wells Fargo having been received rather well on Friday."

Wall Street broke a six-day losing streak on Friday after upbeat figures from JPMorgan Chase, which announced a $US5 billion ($A4.90 billion) second-quarter profit even after accounting for $US4.4 billion in trading losses. The Dow Jones Industrial Average rallied 1.62 per cent.

Asian shares edged higher on Monday on the back of the strong US rally, but Chinese stocks plunged to a new three-year low, after growth in the world's second-largest economy slowed.

Hong Kong's benchmark Hang Seng index added 0.15 per cent and Sydney won 0.56 per cent, while Tokyo was shut for a public holiday.

But Shanghai equities slumped 1.74 per cent to 2,147.96, which was its lowest level since March 2009.

Official data released on Friday showed the Chinese economy expanded 7.6 per cent in the second quarter year-on-year, its slowest pace for more than three years as it was hit by ripples from the eurozone debt crisis and slow US recovery.

Chinese Premier Wen Jiabao warned on Sunday that while there was "a lot of dynamism and momentum for economic growth", China's "economic rebound is not yet stable and economic hardship may continue for a period of time".

The comments "reinforced expectations that further policy easing to support growth will be forthcoming", noted economist Lee Hardman at the Bank of Tokyo-Mitsubishi UFJ in London.

He added: "Investor optimism that global policy easing can successfully re-stimulate global growth is for now offsetting the negative impact of building evidence of economic slowdown."

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