European stocks close: stocks traded lower on a drop in shares of the banking sector and on the weak manufacturing PMI data from China

Stock indices traded lower on a drop in shares of the banking sector and on the weak manufacturing purchasing managers' index (PMI) data from China. The Chinese Markit/Caixin manufacturing PMI fell to 49.4 in April from 49.7 in March. The decrease was driven by declines in total new orders and new export work. Output was little-changed, while employment continued to decline.

Market participants also eyed the economic data from the Eurozone. Eurostat released its producer price index for the Eurozone on Tuesday. Eurozone's producer price index rose 0.3% in March, beating expectations for a 0.1% fall, after a 0.7% decrease in February.

On a yearly basis, Eurozone's producer price index dropped 4.2% in March, beating expectations for a 4.3% decline, after a 4.2% fall in February.

Eurozone's producer prices excluding energy fell 1.1% year-on-year in March, after a 0.8% decline in February. Energy prices dropped at an annual rate of 12.1% in March.

The European Commission released its Spring 2016 Economic Forecast report on Tuesday. The European Commission lowered its growth forecasts for this and next years. The Eurozone's economy is expected to expand 1.6% in 2016, down from its previous estimate of 1.7%, and 1.8% in 2017, down from its previous forecast of 1.9%.

Inflation was downgraded to 0.2% from 0.5% for this year, and to 1.4% from 1.5% for next year.

Markit Economics released its manufacturing purchasing managers' index (PMI) for the U.K. on Tuesday. The Markit/Chartered Institute of Procurement & Supply manufacturing PMI for the U.K. dropped to 49.2 in April from 50.7 in March, missing expectations for a rise to 51.2. It was the lowest level since February 2013. March's figure was revised down from 51.0.

A reading above 50 indicates expansion, below indicates contraction.

The drop was driven by declines in output, new orders, employment and stocks of purchases.

"Manufacturing production is now falling at a quarterly pace of around 1%, and will likely act as a drag on the economy again during the second quarter and putting greater pressure on the service sector to sustain GDP growth," Markit's Senior Economist Rob Dobson said.

Indexes on the close:

Name Price Change Change %

FTSE 100 6,185.59 -56.30 -0.90 %

DAX 9,926.77 -196.50 -1.94 %

CAC 40 4,371.98 -70.77 -1.59 %