By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets struggled for
direction as earnings from such heavyweights as Unilever PLC and
Novartis AG gave some reason for optimism Wednesday, but many
investors stayed to the sidelines ahead of a key vote on the U.S.
debt ceiling.
The Stoxx Europe 600 index , lately inching 0.1% lower to
287.47, traded in tight ranges for most of the session.
"There's certainly a lack of conviction following a very strong
start to the year," said Richard Hunter, head of equities at
Hargreaves Lansdown.
"We're waiting for a positive catalyst and one of the things
that could support markets is an improvement in corporate earnings.
More positive voices coming of Europe could also help, and a
similar positive catalyst could be progress on the debt ceiling in
the U.S.," he said.
Among notable movers in Europe, shares of Alcatel-Lucent posted
one of the biggest gains in the pan-European index, up 4.2%, after
Citigroup lifted its rating on the telecom-equipment supplier to
neutral from sell.
Also among the risers, shares of Unilever PLC (UL) picked up
3.1%, after the consumer-products major reported a 5.4% rise in
full-year profit as sales accelerated.
In the same vein, shares of Novartis AG rallied 4.8%. The Swiss
drug maker said profit rose but sales stagnated in the fourth
quarter, adding that it expects to return to growth next year.
Citigroup also upgraded Novartis to a buy rating from hold.
Assessing fourth-quarter results from the U.S. and the U.K. so
far, Hunter called it a "mixed picture."
"Expectations had been marked down, so there is a scope for
companies to beat expectations, but analysts are also looking at
the actual earnings and management comments. Guidances will be
closely watched and we'll be looking for comments on how companies
will start putting their excess cash to work," he said.
U.S. budget focus
For the broader stock markets, investors trained their attention
on the next moves in what have been highly contentious U.S. deficit
talks.
The House of Representatives was due to vote on raising the U.S.
debt limit through the middle of May, while President Barack Obama
was expected to sign such a bill if one is passed by Congress.
U.S. stocks ended higher on Tuesday, supported by encouraging
earnings. Tech majors Google Inc. (GOOG) and IBM Corp. (IBM) both
issued upbeat results after the close on Wall Street.
U.S. stock futures pointed to a mostly lower open on Wall
Street.
Closer to home, European Central Bank President Mario Draghi
said late Tuesday that the darkest clouds over the euro zone have
subsided.
"We can begin 2013 on a more confident note, precisely because
significant progress was made during 2012," he said in a speech at
the Frankfurt Chamber of Commerce and Industry.
Movers
The German DAX 30 index rose 0.1% to 7,706.26, as shares of SAP
AG (SAP) took on 2%. The software firm said it expects rapid growth
to continue in the year ahead and said momentum "has never been
stronger".
On a more downbeat note, heavyweight industrial firm Siemens AG
(SI) dropped 0.4%. The company said net profit in the three months
to Dec. 31 fell 12% as orders slipped.
And in France, shares of BNP Paribas SA lost 1.5%, after
Deutsche Bank cut its rating on the bank to hold from buy, saying
the stock had reached its target price.
Other Paris-listed banks also traded lower, with shares of
Credit Agricole SA off 2.2% and Société Générale SA down 2.1%.
The CAC 40 index moved down 0.5% to stand at 3,722.63.
But shares of Barclays PLC (BCS) put on 0.2% in London, as a
representative Tuesday told The Wall Street Journal that the bank
has started looking into potential job cuts at its U.K.
investment-banking business, as part of a formal review.
Among other U.K. stocks, shares of TUI Travel PLC gave up 4.3%,
as TUI AG said it won't bid for the British travel agent, ditching
a plan to merge the two companies. Shares of TUI AG slumped 6%.
London's FTSE 100 index rose 0.1% to 6,187.69.
Outside the major European indexes, shares of Nokia Corp. (NOK)
gained 3.1% to EUR3.53, after J.P. Morgan Cazenove lifted the
Finnish handset maker's price target to 2 euros ($2.66) from
EUR1.20 previously.
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