UKX FTSE 100 Index

By Mike Bird and Kenan Machado 

European stocks dipped in trading Monday as the weakness of the U.S. dollar continued to affect global markets.

The Stoxx Europe 600 index was down by around 0.4% in late morning trading, weighed down by a 0.9% fall in Britain's FTSE 100 and a 0.4% drop in Germany's DAX.

Fresh economic data for the eurozone on Monday suggested the economy grew slightly more slowly than analysts had expected during July. The IHS Markit flash purchasing managers index, a key business survey, came in at 55.8. That is lower than the 56.2 analysts had expected, and a six-month low for the index. Any figure above 50 indicates an economy is growing.

In the U.S., equity futures pointed to a lower open too. S&P 500 and Dow Jones Industrial Average futures dipped 0.1% apiece before the opening bell.

Shares of major European auto makers were among the hardest hit on Monday, after the European Commission's confirmation that it is assessing accusations of coordination efforts by rival companies to manipulate diesel engines to reduce emissions.

Shares in Volkswagen, Daimler AG and BMW fell by 2.7%, 3.3% and 2.3% respectively.

In foreign-exchange markets, the euro touched its highest intraday level since January 2015 during the early Asian trading session Monday, above $1.168. The dollar fell 0.4% to 110.8 against the Japanese yen.

On Friday, the WSJ Dollar Index reached its lowest close since Sept. 30, down 6.92% since the beginning of the year. The index was down another 0.1% on Monday.

Concern about policy direction from the White House and Capitol Hill since the failure to repeal the Affordable Care Act and investigations into contacts with Russians before November's election have helped fuel dollar selling.

Sentiment on the dollar will stay negative until there is a string of upbeat U.S. economic data along with a hawkish Federal Reserve and a dovish European Central Bank, said Kay Van-Petersen, a macro strategist at Saxo Bank in Singapore. The Fed is scheduled to meet this week.

A stronger euro has knock-on effects for the European economy and can weigh on earnings expectations for export-oriented firms.

"If the euro remains at or above current levels, it is likely increasingly to have a bearing on the euro area economic outlook, weighing somewhat on GDP growth via net trade," said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe.

Oil prices were little changed Monday after a decline on Friday as the Organization of the Petroleum Exporting Countries continued to grapple with the growing challenges to removing what it sees as a global oversupply of oil from the market.

Despite a deal struck last year to take out almost 1.8 million barrels of crude oil from the global market, prices remain stubbornly low. West Texas Intermediate crude oil for delivery in September ticked 0.7% higher to $46.11 per barrel Monday.

The Nikkei closed 0.6% lower on Monday. Among the biggest stock decliners in Japan were export-reliant companies, as is often the case when the yen strengthens, since that eats into such firms' earnings.

Beyond Japan, most indexes moved little from Friday's closing levels. Hong Kong's Hang Seng Index, however, rose 0.5% after its nine-session winning streak ended Friday.

Write to Mike Bird at Mike.Bird@wsj.com and Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

July 24, 2017 07:20 ET (11:20 GMT)

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