European stocks fell, posting their longest losing streak in a month, after Chinese inflation data indicated more weakness in the world’s second-biggest economy.

Equities are dropping this week, after rallying to a one-month high on Friday, as disappointing economic reports in China reignited global growth concerns. Data today showed the country’s consumer inflation moderated and factory gate deflation extended a record stretch of declines.

“We may have had a bit of a rebound last week but investors are still on edge,” said Markus Wallner, an equity strategist at Commerzbank AG in Frankfurt. “The problem is trying to figure out how much slowing demand from China will hurt the global economy. Earnings estimates will continue to go down. Any rally towards the end of the year would come from China’s government doing more to stimulate the economy.”

David Fuller's view

We are in the middle of October; short-term stock market indicators were overbought at the beginning of this week, and China remains at the centre of investor concerns. 

Those concerns may be overdone, but there has seldom been more uncertainty about China, which has considerably more influence now that it is the world’s second largest economy.