By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stocks rose on Tuesday, with
banks driving the gains after German jobless figures came in better
than expected and Ireland marked a successful return to the
international bond market. Broker moves across the board left BASF
SE higher and Swedish Match AB lower.
The Stoxx Europe 600 index rose 0.7% to 329.32, with the oil
sector helping pad out those gains. The index eased 0.2% on
Monday.
Vestas Wind Systems AS was among the biggest movers on the Stoxx
600, up more than 6%. The wind-turbine maker upgraded its free
cashflow expectations for 2013 to around 1 billion euros ($1.36
billion).
On the downside, shares of Swedish Match AB were a top decliner,
off 5.4% after Citi cut it to sell from neutral, saying competition
pressures in Sweden were likely to continue in 2014. It cited
specific worries about the cigar sector.
Broker moves triggered action for several companies. Shares of
BASF SE added nearly 3% after UBS lifted shares to buy from
neutral, saying the company should resume a re-rating trend
relative to other big-cap-chemical household names. UBS also cut
Air Liquide SA to sell from neutral, triggering a drop of 1.4%,
saying shares in the industrial-gas producer should resume
underperformance versus BASF.
The German DAX 30 index rose 0.7% to 9,497.03 after data showed
seasonally adjusted jobless claims in the country falling 15,000 to
2.97 million in December, which was better than expected. German
retail sales data also came in better than expected, with a
November preliminary rise of 1.5%.
"If Germany can show an improving labor market, it gives hope to
the region overall, although all bar Germany have substantial
reform to undertake if they are to match German efficiency," said
Stephen Pope, managing partner at Spotlight Ideas, in emailed
comments.
European stocks also rose after data showed euro-zone inflation
falling back in December, further below the European Central Bank's
target.
Tom Rogers, senior economic advisor to the EY Eurozone Forecast,
said the central bank will "need to remain alert to the risk of
deflation, and following Thursday's Governing Council meeting, be
prepared to respond to increased speculation over which policy
tools it might use to try and address falling prices."
Banking stocks were the day's best performers, and investors
also got encouraged as Ireland successfully sold 3.75 billion
euros' ($5.1 billion) worth of 10-year bonds on Tuesday to strong
demand, according to news reports. The return to the bond market
follows the country's exit from its international bailout
program.
The French CAC 40 index rose 0.7% to 4,258.29, with banks such
as Credit Agricole SA soaring 7%, BNP Paribas SA up 3% and Societe
Generale SA gaining over 4%. Shares of Total SA (TOT) rose 0.8% as
the oil sector gained amid strong energy prices.
In Frankfurt, shares of Commerzbank AG jumped 6%, while in
London, HSBC Holdings PLC (HSBC) rose 3.4%. BP PLC (BP) gained
close to 1%, helping drive the FTSE 100 index up 0.5% to
6,763.16.
Also in London, shares of Severn Trent PLC fell 2% after J.P.
Morgan Cazenove cut shares in the water company to underweight from
neutral. It cited concerns about rising regulatory risks, and a
decreasing likelihood of mergers and acquisitions activity.
A number of technology companies were affected by a note from
Barclays analysts on the sector. They said they see a gradual
improvement for the European tech sector, but shares of ST
Microelectronics NV slid 2% after a cut to underweight from
equalweight.
The best performer for Tuesday so far was the Spanish IBEX 35
index , rallying 2.8% to 10,176.40, with Banco Santander SA (SAN)
up nearly 4% and BBVA SA (BBVA) up more than 5%%.
Data released Monday from Markit indicated strengthening in
Spain helped raise a gauge of the euro zone's services sector and
the broader private sector in December.
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