Summary After an excellent performance last week, European equities are heading slightly lower.
LONDON (AFP) - European stock markets dropped on Monday following a credit downgrade for Italy and in the wake of disappointing Chinese economic data that offset positive job numbers out of the United States, analysts said.
London's FTSE 100 index of leading companies dipped 0.03 percent to 6,481.57 points approaching midday.
Frankfurt's DAX 30 fell 0.37 percent to 7,957.00 points after reaching a five-year high above 8,000 on Friday.
In Paris, the CAC 40 dropped 0.51 percent to 3,820.43 points, while Madrid shed 1.45 percent and Milan gave up 1.11 percent.
The euro stood at $1.3003 compared with $1.3004 late on Friday in New York. Gold prices fell to $1,578.68 an ounce on the London Bullion Market from $1,581.75 Friday.
"After an excellent performance last week, European equities are heading slightly lower," said Gekko Global Markets trader Anita Paluch.
"Not surprisingly, Italy's angst is affecting the mood -- the political gridlock is taking its toll in the form of a most recent downgrade by Fitch... Also the Chinese inflation data contributes to the risk-off environment," she added.
Italy's economy shrank by 0.9 percent in the fourth quarter of 2012 from the previous one, official data showed Monday, confirming a previous estimate that showed a deeper recession in the eurozone's third largest economy.
The data came after international ratings agency Fitch on Friday said it had downgraded Italy's sovereign debt rating by one notch to "BBB+" from "A-" and added that the outlook was negative.
Fitch pointed in particular to "the inconclusive results of the Italian parliamentary elections on 24-25 February" which "make it unlikely that a stable new government can be formed in the next few weeks."
In Asia on Monday, the region's stock markets closed mixed, with Shanghai dipping as disappointing economic data fuelled concerns about China's economy.
Chinese inflation hit a 10-month high in February while growth in industrial production and retail sales slowed, official data showed on Saturday, complicating policymakers' efforts to boost recovery.
Growth in the world's second-largest economy slowed to a 13-year low of 7.8 percent in 2012, though a pick-up in the final three months had raised hopes for a rebound this year.
"This slower than expected pickup in economic activity set against a backdrop of rising prices could well make it difficult for Chinese authorities to be as proactive at stimulating growth as they would like in the coming months, which in turn could raise concerns about the strength and pace of the recent recovery," said Michael Hewson, senior analyst at London-based traders CMC Markets.
On Wall Street Friday, the Dow broke 14,400 points for the first time after the Labor Department reported the United States generated a net 236,000 new jobs in February, far more than expected. The US unemployment rate fell to a four-year low of 7.7 percent.
The report reinforced views that the economy is solidifying its recovery, while analysts said underlying figures and upcoming spending cuts meant the Federal Reserve was unlikely to take its foot off its monetary easing soon.
