European equity markets struggled for direction on Monday as strong economic data from China vied with concerns over a double-dip recession in the UK and the eurozone.

Chinese markets had been lifted by news that the world’s second-biggest economy grew 6.5 per cent in the fourth quarter — a faster rate than before the coronavirus pandemic, and above expectations. Economic output expanded 2.3 per cent during the course of 2020, easily outstripping other big economies.

The CSI 300 index of Shanghai and Shenzhen-listed stock rose 1.1 per cent, while Hong Kong’s Hang Seng index closed 1 per cent higher.

European stocks were muted by comparison. The continent-wide Stoxx 600 index was up a little more than 0.1 per cent in late-morning trading, while Germany’s Xetra Dax rose 0.3 per cent. London’s FTSE 100 benchmark was flat.

The pace of expansion in China’s output should feed through to a variety of industries, analysts said. “In regards to Europe, it’s particularly positive,” said Hani Redha, portfolio manager at PineBridge Investments, highlighting China’s reliance on sectors such as manufacturing and infrastructure, where faster growth bodes well for European stocks.

But the spread of new variants of Covid-19 — and the economic cost of extended winter lockdowns to control the virus — continue to whittle away positive sentiment generated by the rollout of vaccines.

“The virus is continuing to spread, there’s just a little bit of a pause in the markets, as they take on how virulent this new strain is, and how long this is likely to go on for,” said Dean Cheeseman, portfolio manager at Janus Henderson.

Investors were weighing the prospect of vaccinations against the realities of new lockdowns, said Armin Peter, global head of debt syndicate at UBS. “The market has gone quite a way ahead of itself — I think now it’s trying to rebalance.”

US markets were closed on Monday for Martin Luther King day.

The oil market was flat, with Brent crude, the international marker, fetching $55 a barrel.

Elsewhere in Asia markets, Japan’s Topix shed 0.6 per cent, the Kospi 200 in South Korea fell 2.4 per cent, while the S&P/ASX 200 in Australia dipped 0.8 per cent.