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US, European stocks retreat as eurozone PMI data disappoints

Perceived progress in trade talks clouded by disappointing eurozone data.

US, European stocks post losses.

➤ Sterling falls as UK latest Brexit offer fails to address backstop issue.

➤ Gold jumps 0.8%.

U.S. stocks posted losses Sept. 23, alongside European equity markets, as perceived progress in U.S.-China trade talks was clouded by disappointing eurozone economic data.

The S&P 500 index was down 0.3% around 9:31 a.m. ET and Nasdaq 100 slipped 0.1%.

U.S. Trade Representative's office said the two-day trade meeting with Chinese officials that ended Friday were "productive" and that high-level talks would take place in October. The U.S. also exempted 437 Chinese product types from additional import tariffs.

China's Ministry of Commerce said the talks were "constructive" as a Chinese official reportedly said discussions on agriculture yielded a positive outcome, dismissing concerns over a canceled visit to American farms. The cancellation was unrelated to the trade talks, Bloomberg News reported, with Washington expected to reschedule the visit.

"Markets have been disappointed too many times before to assume that some kind of trade deal can be struck in October," said analysts at ING Research, adding that markets will instead react to economic data and the scope for monetary and fiscal stimulus.

In Europe, the FTSE 100 lost 0.3% and France's CAC 40 declined 1.1%. Germany's DAX shed 1.2%.

The eurozone economy nearly halted in September after business activity growth across the 19-nation bloc unexpectedly declined. The German manufacturing sector observed the sharpest decline since mid-2009.

"With survey data like these, pressure will grow on the [European Central Bank] to add to its recent stimulus package," said Chris Williamson, chief business economist at IHS Markit.

Nordea Markets Senior Analyst expects another rate cut from the central bank in December and an expansion of the asset purchase program.

The Shanghai SE Composite fell nearly 1% and Hong Kong's Hang Seng declined 0.8%. Japanese markets were closed for a holiday.

The dollar spot index, which measures the currency against a basket of peers, rose 0.2% around 9:30 a.m. ET. The euro depreciated 0.3% versus the dollar.

Sterling declined 0.4% as a leaked EU memo showed that the U.K.'s latest proposals for a Brexit deal failed to provide "legally operational solutions" to the Irish backstop, the biggest hurdle in the negotiations for a withdrawal agreement. The U.K. Supreme Court is due to rule later this week on Prime Minister Boris Johnson's suspension of Parliament.

The Chinese yuan was down 0.5% while the Japanese yen was little changed.

In bond markets, U.S. 10-year Treasury yields lost 2 basis points to 1.703% around 9:30 a.m. ET.

European bonds rallied, with the yield on 10-year German Bunds dropping 5 basis points and that on Italian and Spanish bonds with the same maturity losing 7 basis points each.

Among commodities, Brent crude gained 0.2% to $64.38 per barrel on the ICE Futures Exchange amid reports that repair work in Saudi Arabia to fully restore the sites attacked Sept. 14 may take many months, rather than the 10-week period Saudi Arabian Oil Co. executives said were needed. Separately, the U.S. imposed sanctions on the Central Bank of Iran on Friday, citing counterterrorism concerns, after Iran threatened an all-out war.

Gold jumped 0.8%.

More from S&P Global Market Intelligence:

Sovereign ratings wrap: S&P upgrades Spain; Moody's cuts Hong Kong outlook

Clarida: Fed going 'one meeting at a time,' divisions over next steps healthy

Saudi attack highlights particular importance of Abqaiq facility to Aramco, US

H.8 report: US banks boost loans by $41B in August

The day ahead:

9:50 a.m. ET – U.S. Fed's John Williams speaks

1 p.m. ET - U.S. Fed's James Bullard speaks

2:30 p.m. ET – U.S. Fed's Mary Daly speaks

8:30 p.m. ET – Japan PMI manufacturing index flash