European shares close narrowly mixed; HSBC drags
European shares finished around the flatline Monday, as a worse than expected earnings report from HSBC weighed on the market following strong data from Europe's services sector.
The pan-European FTSEurofirst 300 index, eked out a gain of 0.65 points, or 0.05 percent, at 1,225.39 points after briefly touching a fresh two-month high at 1,231.31 points.
The index has risen 5.7 percent in the past month, boosted by flows into developed market equities on the back of better economic data from the United States and, to a lesser extent, the euro zone.
HSBC reported first-half pre-tax profit slightly below expectations at $14.07 billion. Revenues for the six months to the end of June also disappointed, coming in $34.37 billion, short of an expected $34.8 billion.
The news from HSBC came after euro zone services PMI came in at 49.8 in July, its highest level since January 2012.
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Germany's service sector lead the way as predicted, growing for the third month in a row in July to come in at 51.3. A PMI reading of 50 or above indicates activity in the sector is accelerating, while one below 50 indicates it is slowing.
Activity in Italy's services sector hit a two-year high in July, rising to 48.7 from 45.8 in June. While in France, the sector posted its best reading in 11 months in July at 48.6 - an improvement on June's 47.2. Spain's services sector was still shrinking in July, but at its slowest rate since 2011.
In the U.K., services PMI was the highest recorded level since December 2006, while the composite PMI for the country, came in at 59.5 in July against 56.1 in June - a figure which Tom Vosa, head of market economics at National Australian Bank, described as "amazingly strong".
Encouraging Chinese economic data over the weekend also showed an improvement in the services sector, as non-manufacturing PMI rose to 54.1 in July.
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Asian stocks on Monday pulled back from last week's highs following a tepid U.S. jobs report, but the positive Chinese data capped larger losses.
In the U.S., stocks eased off their lows Monday following an ISM non-manufacturing report that showed the pace of growth in the services sector accelerated in July.
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