By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Europe's main stock market was set to
close the week with a slight loss after a choppy session Friday as
investors grew cautious ahead of next week's Federal Reserve
meeting.
On the upside LVMH Moet Hennessey Louis Vuitton SA, Belgacom SA
and Pearson PLC all gained on results.
The Stoxx Europe 600 index flattened out below the key 300 level
at 299.10, headed for a weekly loss of around 0.2%. The index
closed 0.5% lower a day earlier as investors fretted about economic
growth in China and a downbeat set of earnings from some big
companies. See video: Europe's Week Ahead
The global backdrop was mixed, with U.S. markets paring losses
after an upbeat reading on consumer sentiment. Stocks in Japan sank
3% as exporters fell on a strong yen.
"European markets are trading cautiously because traders are not
willing to place better bets ahead of the FOMC [Federal Open Market
Committee] meeting" next week, said Naeem Aslam, chief market
analyst at Ava Trade, in emailed comments.
"This is despite the fact that Bernanke may deliver another well
prepared statement on Wednesday and may keep the current pace of
the asset purchase," said Aslam. "However, the market is also very
much used to an idea of surviving without the stimulus help, but it
is the earnings results which has dampened the mood in Europe."
Stocks fell on Thursday after companies such as BASF SE
delivered earnings below analysts' forecasts.
There was a little bit of earnings cheer on Friday. Atop the
Stoxx Europe 600 gainers, Pearson PLC shares jumped 6%. The
publisher said it swung to a first-half loss as it continues to
restructure its business. The company said in trading terms, 2013
has begun as expected.
The FTSE 100 index fell 0.3% to 6,570.12. Shares of
GlaxoSmithKline PLC (GSK) fell over 1%. Shares of British Sky
Broadcasting Group PLC fell close to 4%, even as it reported a rise
in full-year profit, but analysts noted shares have had a strong
recent run.
Also surging, shares of Belgacom SA jumped 10% after the
telecommunications group's results beat analysts' expectations and
the company also said it was on track to meet full-year
guidance.
Friday also marks the one-year anniversary of a promise by
European Central Bank President Mario Draghi to do "whatever it
takes" to preserve the euro. In an interview with Handelsblatt
newspaper, former ECB chief economist Jurgen Stark warned that the
crisis will likely come to a head in late autumn and France could
be the next to require use of the ECB's bond-buying Outright
Monetary Transactions program.
Analysts at Credit Suisse upgraded the banking sector to
overweight from benchmark, citing "clear signs" of macro
improvement in the euro area and attractive valuations. European
banks, the analysts noted, are trading at a near-record 42%
price/tangible book versus U.S. banks. That ratio refers to the
price of a security versus its value, excluding intangible
assets.
Top picks for Credit Suisse include HSBC PLC (HBC) , BNP Paribas
SA , Societe Generale SA , Julius Baer Gruppe AG and Deutsche Bank
AG .
Shares of HSBC were flat in London, but in Paris, BNP Paribas
rose 1.4% and Societe Generale edged up 0.4%. The French CAC 40
index rose 0.7% to 3,983.32, boosted as LVMH Moet Hennessey Louis
Vuitton rose over 4%. The luxury goods group reported the prior day
that organic growth in the second quarter rose 0.9%, accelerating
from the first period.
Also in that sector, shares of Kering SA rose nearly 4%. The
owner of the Gucci label said sales growth for its luxury unit rose
6% in the second quarter, from 4.5% in the prior quarter.
Not seeing any gains, the German DAX 30 index fell 0.4% to
8,258.54. Autos were leading the decliners, with Daimler AG down
1.7%. Concerns about Chinese growth have been weighing on growth
stocks this week.
Also down, shares of heavyweight Seadrill Ltd. fell 1.3% after
HSBC cut it to neutral from overweight.
Some peripheral indexes were faring better than the core
markets. The IBEX 35 index jumped 1.2% to 8,373.40, as Banco
Santander SA (SAN) rose over 1%.
The Greek ASE Composite index rose 2.6% to 865.18, with shares
of Hellenic Telecommunications Organization SA up nearly 3%.
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