European equities closed lower, dropping from a three-month high, after U.S. factory data raised concern that the world’s largest economy may not be strong enough to withstand higher borrowing costs.
The Stoxx Europe 600 Index reversed an earlier gain to end the day down 0.3 percent. Manufacturing in the U.S. unexpectedly contracted in November at the fastest pace since the last recession. The move came after the Stoxx 600 climbed for a second month in November, taking its rebound from a low in September to 14 percent through Monday.
Gases supplier Linde AG slumped 14 percent, the most since 1999, after cutting its earnings targets for the third time in just over a year. Safran SA dropped 2.5 percent after France lowered its stake in the jet engine maker.
U.K. shares managed to maintain gains after the U.S. data, boosted by advances in its lenders as the Bank of England said all seven major firms passed stress tests. Barclays Plc and Lloyds Banking Group Plc climbed more than 2.4 percent. That pushed the FTSE 100 Index to post one of the biggest gains in western-European markets, with the volume of shares changing hands about 22 percent greater than the 30-day average.