The flagship CAC 40 index fell 0.54%, or 39.05 points, to 7,170.27 points around 10:00, again the lowest since late March. On Tuesday it had fallen sharply by 1.29%.

Manufacturing activity in China fell in May for the second straight month, according to official data released on Wednesday, as the post-Covid recovery of the world's second-largest economy looks more painstaking than expected.

This purchasing managers' index (PMI), which reflects the health of the industrial world, came out below the estimates of analysts surveyed by Bloomberg.

"Domestic demand has weakened recently, partly due to the slowdown in the housing market and the second wave of Covid. External demand is also not favorable, while the United States is facing a risk of recession," said economist Zhiwei Zhang of Pinpoint Asset Management.

A situation likely to limit the growth of luxury giants, of which China is one of the main markets.

LVMH lost 1.52%, Kering 2.22% and Hermès 1.36%.

More generally, for analysts at Natixis CIB Research, "the disappointment of the Chinese PMI could well bring macro concerns back to the forefront and raise the level of risk aversion".

By Tuesday, recession fears had already returned to investors' minds and weighed on equity markets, bond yields and oil prices.

In France, GDP growth in the first quarter was confirmed by INSEE at +0.2%, supported in particular by foreign trade while domestic demand was at half-mast.

French household consumption fell by 1% during the month of April, a steeper drop than in the previous two months.

But good news, inflation slowed sharply in May to 5.1% year-on-year, after 5.9% in April.

Investors will be scrutinizing inflation and growth figures for other eurozone countries, including Germany, ahead of the first estimate of eurozone inflation in May due on Thursday.

"The evolution of food prices in May and +core+ inflation will be decisive for the European Central Bank's monetary policy expectations for the coming months on the markets," said Christian Parisot, for broker Aurel BGC.

Markets will also be paying attention to political news in the United States, where the elected members of the House of Representatives are called on Wednesday to vote for or against the agreement reached between Democratic President Joe Biden and Republican leader in the House, Kevin McCarthy, to raise the country's debt ceiling, and thus avoid a default.

Time is running out, and without a validated agreement, the United States could find itself short of cash and in default as early as June 5, according to the US Treasury.

JCDecaux expands to Italy and Spain

French display advertising giant JCDecaux (+0.38% to €18.29) bought the activities of its competitor Clear Channel in Italy and Spain.

© 2023 AFP