European shares drop as China data dent optimism

European stocks declined as disappointing Chinese data dented investor enthusiasm after last week's rebound trimmed the worst January loss since 2008.

The Stoxx Europe 600 Index slipped 0.5 percent to 340.64 at 10:02 a.m. in London. Amid a volatile start to the year, the equity gauge pared its January loss to 6.4 percent, as stimulus from the Bank of Japan and indications that the European Central Bank may reconsider its policy stance in March eased some concerns about the impact of China's slowdown and an oil rout on global growth.

"Investors are getting conflicting signals about global growth," said Daniel Murray, London-based head of research at EFG Asset Management. "It's all very confusing and it's making people nervous. Even the smallest macro event or data point can tip sentiment either way."

China's official factory gauge dropped to a three-year low in January, missing forecasts and signaling a record sixth straight month of deterioration. The official services index also fell.

All Stoxx 600 industry groups lost ground in January, with banks, miners and auto companies the hardest hit. Among national benchmarks, Italy's FTSE MIB posted the biggest drop, losing 13 percent. Germany's export-heavy DAX Index slid 8.8 percent for its largest monthly decline since August. "It's common to get a bounce when markets fall this far this quickly, but occasionally you get a rollover, and that's the challenge now," said Murray. "The longer this cycle goes on, the closer you get to the next recession."

Nokia Oyj dragged a gauge of technology stocks to biggest decline of the 19 industry groups on the Stoxx 600, tumbling 10 percent after investors were dis- appointed by a court decision in a patent dispute with Samsung Electronics Co. Alcatel-Lucent SA slid 11 percent.

Energy-related shares were also among the worst performers as the price of oil slid, with service provider Seadrill Ltd. leading declines.

Luxottica Group SpA fell 8.5 percent after quarterly sales missed analysts' projections. The maker of Ray-Ban eyeglasses also said its co-Chief Executive Officer resigned.

Ryanair Holdings Plc led a measure of travel and leisure companies to the best performance on the Stoxx 600, gaining 3.1 percent after forecasting fourth-quarter traffic will grow more than previously expected and saying it will return 800 million euros ($868 million) to investors via a share-buyback program. BT Group Plc pushed telecommunications companies higher, rising 3.1 percent after quarterly profit beat estimates.