LONDON ( The Deal) -- European stocks backpedaled on Monday, following Asia lower as Japan's economy unexpectedly fell into a recession.
In London, the FTSE 100 slipped 0.30% to 6,634.68, while in Germany the DAX shed 0.47% to 9,209.09. In Paris, the CAC 40 fell 0.46% to 4,183.29.
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European markets took their cue from Asia, where Japan's Nikkei index lost 2.96% to 16,974 following a report showing that gross domestic product in the country fell an annualized 1.6% in the three months through September after dropping a revised 7.3% in the previous period.
Two straight quarterly losses technically mean that the world's third-largest economy has returned to recession, raising expectations that Prime Minister Shinzo Abe will hold off on further increases to a sales tax that has already hurt consumer spending. As early as Tuesday, Abe could make an announcement about the sales levy and call for early parliamentary elections next month.
Across Europe, a further fall in Brent crude prompted by the news out of Japan took its toll on energy stocks.
In Zurich, hearing-aid maker Sonova (SONVF) fell 1.7% to 144.50 Swiss francs after posting first-half profit that fell below expectations. But the company said its full-year outlook remains unchanged at 7% to 9% group sales growth and Ebita increasing by 11% to 15%.
Bucking the downward trend, Merck KGaA (MKGAY) gained 2.84% as investors welcomed an agreement between the German pharmaceuticals maker and U.S. drug giant Pfizer (PFE) to jointly develop and commercialize Merck's anti-tumor antibody known as anti-PD-L1.
Under the terms of the agreement, Merck will receive an upfront payment of $850 million and is eligible to receive up to $2 billion in regulatory and commercial milestone payments. Merck said it's looking to the alliance to gain an early entry into the U.S. oncology market as well as to boost its existing oncology businesses in several other key markets.
Later Monday, investors will turn their attention to the U.S., where a report is due out on October industrial production.
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