By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stocks rose on Tuesday after
German jobless figures came in better than expected and Ireland
successfully returned to the international bond markets.
The Stoxx Europe 600 index rose 0.7% to end at 329.40, with the
oil sector helping to pad those gains. The index slipped 0.2% on
Monday.
Vestas Wind Systems AS was among the biggest movers on the Stoxx
600, rising 6.1%. The wind-turbine maker upgraded its free cash
flow expectations for 2013 to around 1 billion euros ($1.36
billion).
Swedish Match AB was a top decliner, dropping 5.5% after
Citigroup downgraded the tobacco maker to sell from neutral, saying
competition pressures in Sweden were likely to continue in 2014. It
cited specific worries about the cigar sector.
Shares of BASF SE added nearly 3% after UBS lifted the company
to buy from neutral, saying it 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 1.6%,
saying shares in the industrial-gas producer should resume
underperformance versus BASF.
The German DAX 30 index rose 0.8% to 9,506.20 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 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 in December further below the European Central Bank's
target.
Tom Rogers, senior economic adviser 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 after 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 0.8% to 4,262.68, with banks such
as Credit Agricole SA soaring 6.1%, BNP Paribas SA up nearly 3% and
Societe Generale SA gaining 4%. Shares of Total SA (TOT) rose 1.1%
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 2.4%.
BP PLC (BP) gained 1%, helping drive the U.K.'s FTSE 100 index
up 0.4% to 6,755.45.
Also in London, shares of Severn Trent PLC fell 2.2% after J.P.
Morgan Cazenove cut 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 1.5% after a cut to underweight from
equalweight.
The best performer for Tuesday so far was the Spanish IBEX 35
index , rallying 2.9% to 10,178.70, with Banco Santander SA (SAN)
up nearly 4% and BBVA SA (BBVA) up 5.7%.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
