UPDATE 2-European shares end lower in choppy session, FTSE lags

* Euro zone Aug PMI better-than-expected but U.S. shrinks
* Merkel says Brexit backstop solution possible by Oct. 31
* NMC Health up 18% on Fosun-backed bid for stake
* Spanish banks rise on bullish HSBC note

(Recasts throughout, changes comments, updates to close)
By Agamoni Ghosh
Aug 22 (Reuters) - European shares fell on Thursday as mixed
readings of business growth across major economies and
uncertainty over the U.S. interest rate outlook made investors
nervous, while a jump in the pound dented London stocks.
The latest data showed business growth in the euro zone
recovering marginally in August but factory activity shrinking
in both Japan and the United States, raising questions about the
health of the global economy.
Adding to the dour mood, Germany's central bank said it did
not see the need for fiscal stimulus at this time, even though
it expected the economy to shrink again this
quarter. The pan-European STOXX 600 index .STOXX ended 0.4% lower,
with euro zone equities .STOXXE down 0.6%.
Further denting sentiment was comments from Philadelphia
Federal Reserve Bank President Patrick Harker who said on
Thursday that he did not see the case for additional stimulus.
Markets are however, waiting for more clarity on the Fed's
stand from Chairman Jerome Powell who is due to talk at 1400 GMT
on Friday and offer further clues on the rate-cut outlook.
"It is quite clear that markets are in wait and see mode
before Jerome Powell's speech tomorrow," said Craig Erlam,
senior market analyst at Oanda.
"The hope is that they (Fed) are going to abide by market
expectation and cut rates a couple more times this year."
London's exporter-heavy FTSE 100 .FTSE lagged the broader
markets as the pound GBP= jumped after German Chancellor
Angela Merkel said a solution to the Irish border issue could be
found before the Oct. 31 deadline for Britain to leave the
European Union. GBP/
The backstop, which requires UK to obey some EU rules if no
alternative can be found to keep the land border between
Northern Ireland and Ireland invisible, has been the most
contentious issue in Britain's exit process from the European
Union. Banks .SX7P were among the few sectors in the black as
lenders in the region cheered the European Central Bank's latest
move to offer them more time to set aside cash to cover for
loans that have gone or may go unpaid. Madrid's lender-heavy index .IBEX got an additional boost
from a more than 2% rise in BBVA BBVA.MC , Caixabank CABK.MC ,
and Banco Sabadell SABE.MC after HSBC took a bullish stand on
the domestic banking sector in Spain. The biggest gainer on STOXX was NMC Health NMC.L on
reports of China's Fosun 0656.HK having made competing offers
to buy a 40% stake, while shares of Ambu AMBUb.CO plunged 10%
after it issued its second profit warning in three
months. Hopes of stimulus by major economies to stave off a global
recession have helped equities in the past week stabilise, but
the STOXX 600 is still on course to end August lower.