By Tommy Stubbington
European stocks fell Tuesday, as some patchy corporate earnings
encouraged investors to pull back from a market that has rallied
sharply this year.
The Stoxx Europe 600 closed 1.5% lower. Health-care stocks on
the index led declines, falling 2.5%, as Monday's steep decline in
highflying U.S. biotechnology stocks weighed on the sector in
Europe.
Elsewhere, investors looked to earnings.
Swiss engineering firm Geberit AG slipped after it said the
surging Swiss franc hurt its first-quarter profit. Swedish
industrial-tools maker Atlas Copco and Finnish paper maker
UPM-Kymmene Oyj also declined after first-quarter results
disappointed.
Oil major BP gave up early gains to finish lower after a decline
in first quarter profit.
Stocks in Europe have enjoyed a strong run so far in 2015, with
the Stoxx Europe 600 up 18.6% even after Tuesday's fall. The launch
of the European Central Bank's massive bond-buying program, along
with a tentative improvement in the region's economy, have fueled
the move. But analysts say more convincing signs of earnings growth
will be needed to drive markets higher.
"We have seen positive impulses like a weaker euro and ECB
[stimulus measures] priced in and people are waiting for some
positive earnings surprises. Overall we're not really seeing that
yet," said Christian Stocker, an equity analyst at UniCredit.
Germany's DAX index fell 1.9% on Tuesday, France's CAC 40 lost
1.8%, while the U.K.'s FTSE 100 slipped 1.0%.
Tuesday's declines in Europe reversed the previous session's
surge in stock markets, which came after a shake-up of Greece's
team negotiating with creditors was seen by investors as increasing
the chance of a deal on further financial aid for Athens.
Relief continued to spread in Greek markets Tuesday despite the
pullback in broader European equities, with the Athex Composite
index climbing 1.4%.
Greece's two-year bond yield fell more than two percentage
points to 19.9%. A week ago, two-year yields touched nearly 30%.
Yields fall as prices rise.
"The Greek government looks to be laying the ground for at least
some form of political compromise," said analysts at Rabobank.
Still, Greek bonds remain at a level that indicates investors
are pricing in a considerable risk of default.
In currency markets, the dollar fell against the euro and the
British pound. The euro was up 0.9% at $1.0972 and sterling rose
0.7% to $1.5326.
The pound had earlier briefly dipped after the U.K. economy grew
more slowly than expected in the first quarter. Slower growth is
likely to encourage the Bank of England to hold off for longer
before raising interest rates.
In commodities, Brent crude was 0.4% higher at $65.10 a barrel.
Gold was up 0.8% at $1,212.90 a troy ounce.
Write to Tommy Stubbington at tommy.stubbington@wsj.com
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