* Lawmakers seek to block no-deal Brexit
* London's FTSE down after four-day run of gains
* U.S. manufacturing contracts for first time in 3 yrs
(Updates to close)
By Sruthi Shankar and Medha Singh
Sept 3 (Reuters) - European shares retreated from a 1-month
high on Tuesday as weak U.S. factory data added to worries about
global growth, while uncertainty over Britain's chaotic exit
from the European Union knocked the FTSE 100 lower after a
four-day run of gains.
The pan-European STOXX 600 index .STOXX dropped 0.2% at
the close after falling as much as 0.7% following the release of
data showing U.S. manufacturing activity contracted for the
first time in three years in August. The Institute for Supply Management's latest numbers came as
stark evidence of the U.S.-China trade war taking a toll on
global growth, sending risky assets such as oil and global
stocks lower. O/R MKTS/GLOB
Europe had its own headache to deal with. After British
Prime Minister Boris Johnson on Monday implicitly warned
lawmakers to back him on Brexit or face an election, an alliance
of opposition lawmakers and rebels in Johnson's Conservative
Party began a bid to stop to block a no-deal exit.
A vote is expected after 2000 GMT. Johnson lost his working majority in parliament when one of
his Conservative lawmakers defected to the pro-European Union
Liberal Democrats. London's mid-cap stocks .FTMC , traditionally harder hit by
Brexit concerns, bounced off early lows to close down 0.1% while
the blue-chip index .FTSE fell 0.2% as sterling rebounded.
GBP/
"The likelihood of general election has just gone up given
the fact that they no longer have the parliamentary majority,"
said Will James, senior investment director for European
equities at Aberdeen Standard Investments in London.
"If we see continued period of sterling strength, I would
expect domestically focused mid-cap FTSE 250 names to
outperform. People are currently are quite underweight on the UK
names than the more globally exposed large-cap names."
STIMULUS PACKAGE
European stocks gained some ground after Reuters reported
that European Central Bank policymakers are leaning towards a
stimulus package that includes a rate cut, a beefed-up pledge to
keep rates low for longer and compensation for banks over the
side-effects of negative rates, according to sources.
The ECB has all but promised to announce more stimulus after
its Sept 12 meeting to support a slowing eurozone economy, hit
by an escalation in the U.S.-China trade war.
After both sides imposed tariffs on each other's goods,
Washington and Beijing officials are struggling to schedule a
meeting this month to renew trade talks, Bloomberg reported on
Monday. The rising worries encouraged investors to shift away from
risky equities to safe-haven assets such as government bonds,
resulting in yields on German and Italian 10-year bonds hitting
a record low.
Trade-sensitive shares of Germany .GDAXI and France
.FCHI were down about 0.4% each, while Milan-listed shares
.FTMIB closed down 0.3%.
In Italy, members of 5-Star are holding a ballot on the
party's internet platform on Tuesday to decide whether the group
should join forces with the Democratic Party, its traditional
foe, and expectations are that 5-Star members will approve a
coalition deal. Defensive sectors such as utilities and telecoms were among
the few sectors gaining in the STOXX 600, while oil and gas
companies led decliners with a 0.9% loss as oil prices sank.
O/R
Shares of Takeaway.com TKWY.AS dropped 5.9% after a top
shareholder in Just Eat JE.L said it would vote against the
British food delivery company's proposed 9 billion pound ($11
billion) merger with Takeaway.com. Shares of Just Eat slid 2.8%,
dragging the retail index .SXRP down 0.4%.
France's second largest telecoms operator Iliad ILD.PA
fell 6.3%, the biggest decliner on the STOXX 600, after it
reported a loss of 127,000 mobile subscribers to competitors in
the first half of the year.