LONDON: Europe's main stock markets were choppy in mid-session Tuesday as upbeat eurozone data, notably on jobs, undermined previous expectations of a fresh European Central Bank stimulus this week.
In mid-afternoon deals, both Frankfurt and Paris markets had slipped back despite strong economic data.
On the upside, London gained 0.5 percent as the Bank of England said Britain's seven top lenders passed its latest stress tests, boosting the financial sector.
Paris and Frankfurt had risen Monday on expectations ECB chief Mario Draghi would unveil fresh economic stimulus on Thursday in the form of more quantitative easing (QE).
Data showed Tuesday that factory growth in the euro area accelerated amid a continued decline in unemployment, extending a tepid recovery.
Markit Economics said its Purchasing Managers Index (PMI) for the eurozone rose to 52.8 in November from 52.3. A reading over 50 indicates expansion.
Eurozone unemployment meanwhile hit its lowest level for nearly four years in October, beating analyst expectations and confirming a slow recovery in Europe's job market.
The EU's Eurostat agency said unemployment in the 19-country bloc fell to 10.7 percent in October, the lowest level since January 2012.
In Germany unemployment fell to its lowest level since the country's reunification in 1990.
While Frankfurt dipped 0.3 percent, trade was contrasted amid a sharp 14 percent gain for power giant RWE, hit hard by government plans to phase out nuclear power and fossil fuels, after it announced plans to spin off its renewables, grids and retail operations and take the unit public as "a platform for growth."
But gas and engineering firm Linde lost 14 percent following a profit warning blamed on macroeconomic conditions and low oil prices.
"Good news may dissuade Mario Draghi from pulling the trigger on more ECB QE, hopes of which have caused the eurozone indices to climb of late," said analyst Connor Campbell at traders Spreadex.
He added that the "data may have somewhat tempered investors' expectations".
In foreign exchange activity, however, the euro edged back from Monday's low of $1.0558 -- which was the weakest level since mid-April to $1.0622.
The ECB is expected Thursday to ramp up its trillion-euro asset purchases and cut key rates to counter weak inflation, analysts said.
"Draghi is still concerned about sluggish inflation and growth in the eurozone, so the ECB could announce further stimulus measures," noted Currencies Direct analyst Amir Khan.
"It should be noted that analysts also expect a deposit rate cut. If the ECB increases stimulus, the euro is likely to weaken further."
The eurozone's inflation rate stood at zero in October, climbing out of negative territory but remaining far below the ECB's target of about 2.0 percent.
The ECB launched in March a 1.1-trillion-euro ($1.2-trillion) scheme to help lift consumer prices. The QE programme to buy sovereign bonds runs until at least September 2016.
In contrast, the US Federal Reserve is widely expected later this month to raise interest rates for the first time in almost a decade.
"Divergent monetary policy could not be more pronounced between the US and the eurozone," Khan added.
Wall Street moved ahead on the eurozone data with the Dow Jones Industrial Average, the broad-based S&P 500 and the tech-rich Nasdaq Composite Index all adding around 0.4 percent.
In Asia, Chinese stocks rose 0.3 percent as the International Monetary Fund's decision to include the yuan in its reserve currency basket offset news that a gauge of Chinese factory activity had hit a more than three-year low.
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