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European stocks dropped the most in almost seven weeks after the Federal Reserve signaled it will scale back its stimulus if the U.S. economy improves and as data showed Chinese manufacturing shrank.
A release from China showed manufacturing in the world's second-largest economy is contracting for the first time in seven months. The preliminary reading of a purchasing managers' index declined to 49.6 in May from 50.4 the previous month, HSBC Holdings Plc and Markit Economics said. That missed the 50.4 median estimate in a survey. Fifty is the dividing line between expansion and contraction.
National benchmark indexes fell in all the 18 western-European markets. The U.K.'s FTSE 100 lost 1.8 percent, its biggest drop since April 5. France's CAC 40 slipped 2.4 percent, while Germany's DAX retreated 2.5 percent.
A gauge of automotive-related companies on the Stoxx 600 tumbled 3.8 percent, for the biggest drop since August. Peugeot, Europe's second-largest carmaker, dropped 5.2 percent to 6.99 euros. Renault SA lost 4.2 percent to 59.53 euros, while Daimler AG slid 4 percent to 47.70 euros.
Shares of commodity companies as a group retreated 3.1 percent. Anglo American Plc, the world's biggest platinum producer, declined 4.6 percent to 1,577 pence. Rio Tinto Group, the world's second-largest mining company, fell 3.5 percent to 2,937.5 pence.
ARM Holdings Plc, whose chip designs power Apple Inc.'s iPhone and iPad, slumped 6.1 percent to 986.5 pence. Exane BNP Paribas downgraded the shares to neutral from outperform, which said the risk/reward on the stock is no longer positive.
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