LONDON: European and Asian stock markets mostly retreated on Wednesday, with Tokyo dropping sharply on a surging yen, as traders reacted to mixed manufacturing data and further losses for oil prices.
The British pound slid against rival currencies as fresh polls showed the campaign for Britain to leave the European Union in the lead, ahead of a June 23 referendum.
Sentiment was generally wary even though official data showed activity in Chinese factories expanded in May for the third straight month, dealers said.
Global equity markets pulled back overnight as investors awaited a May US jobs report and the outcome of a European Central Bank meeting later in the week.
Investors also weighed a batch of mostly encouraging US data released Tuesday for further hints of when to expect an interest rate rise, after US Federal Reserve chief Janet Yellen recently said an increase could be justified in coming months.
"European markets have got off to a slow start in June as investors absorb the latest manufacturing reports from around the globe," said Michael Hewson, chief market analyst at CMC Markets UK.
"Lacklustre manufacturing PMI reports from Japan and China prompted a disappointing Asia session with the Nikkei sliding sharply."
Around 1115 GMT, London's benchmark FTSE 100 index was down 0.7 percent compared with Tuesday's close.
Frankfurt's DAX 30 lost also 0.7 percent and the Paris CAC 40 gave up 0.8 percent.
Energy and mining stocks took a hit as oil prices fell ahead of an OPEC meeting in Vienna Thursday.
"Lower commodity prices are also acting as a minor drag on the basic resource sector with copper prices slipping back along with oil prices," Hewson added.
In Tokyo, the main stocks index slumped 1.6 percent, snapping a five-day winning streak, as the yen surged on news that Japan's prime minister would delay a sales tax rise that threatened the nation's fragile economy.
Shinzo Abe said the rise to 10 percent from eight percent, planned for next year, would now be pushed back by more than two years to late 2019.
Meanwhile the euro and dollar jumped against the pound.
"In a case of deja vu... two further Brexit polls have weighed on the pound, as the currency's sensitivity seemingly increases as the referendum date approaches," said XTB analyst David Cheetham.
Around midday in London, the pound was trading at $1.4437, down from $1.4478 late in New York on Tuesday.
Chinese stocks were lacklustre Wednesday as the nation released official manufacturing data for May.
The official Purchasing Manager's Index (PMI), which tracks activities in factories and workshops, came in at 50.1.
Any reading above 50 signals expanding activity, while anything below indicates shrinkage, but Julian Evans-Pritchard of Capital Economics said readings for May were "underwhelming".
"Although they suggest that activity held up reasonably well last month, they also offer few signs of improvement," he said.
China's economy, the world's second-largest, is a vital driver of global expansion, and investors watch the PMI figure closely as the first available indicator each month of how well the economy is doing.
The key manufacturing sector has been struggling for months in the face of sagging global demand for Chinese products.
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