By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stock markets largely struggled
on Tuesday as investors took some profits off the table ahead of
key central bank meetings, with only the German DAX higher as
Deutsche Bank AG soared on results. UBS AG and BP PLC also rose on
earnings.
The Stoxx Europe 600 index , set to end the month with a
moderate gain of nearly 1.4%, was flat at 297.39. The index closed
the prior session with a 0.5% gain as investors welcomed a new
government in Italy.
U.S. stock futures were flat and a clutch of downbeat data kept
Europe from making any outsize gains. Unemployment data showed
jobless levels higher in the euro zone than a year ago, and jobless
levels also rose in Germany.
Market research group GfK , though, reported that German
consumer confidence came in better than expected for May, though it
slipped.
The data comes ahead of Thursday's European Central Bank meeting
where a growing number of economists are expecting a rate cut.
Peter Garnry, equity strategist at Saxo Bank, said investors have
been taking profits on recent gains, keeping markets from making
headway on Tuesday.
He said financial stocks stand to gain from any ECB policy
easing, but problems remain. "You still have the credit markets not
functioning well in the sense of small to medium-sized companies
are not getting credit. That part is not working yet, so if they
cut the rate, that won't mean a lot to the real economy.
Chicago PMI data out of the U.S. is a near-term focus for
investors, while S&P/Case-Shiller's 20-city home-price index
saw the biggest year-on-year growth since 2006, though U.S. stock
futures were unmoved.
Shares of UBS (UBS) rose 7% after the Swiss investment bank
nearly doubled expectations with a profit of 988 million Swiss
francs, driven by its wealth management and investment bank
units.
Shares of Germany's Deutsche Bank AG (DB) rose nearly 6% after
reporting results after the close of markets the prior day. The
financial institution said its first-quarter profit rose to 1.7
billion euros, or 1.71 euros per share, which exceeded forecasts.
The bank also announced capital-raising measures of around 2.8
billion euros.
Analysts at J.P. Morgan Cazenove upgraded the investment bank to
overweight from neutral, applauding the fact the bank is "finally
starting to address its capital issues." Nomura lifted Deutsche
Bank to neutral from reduce, saying stronger capital will "end
recent underperformance."
Helped by its heavyweight bank, the German DAX 30 index
outperformed the rest of Europe with a gain of 0.7% to
7,932.59.
On the downside, shares of Anheuser-Busch Inbev NV (AHBIY) fell
nearly 2.8% after the beer group said first-quarter volumes in its
Brazil and U.S. markets fell, as it posted sales that missed
expectations.
In London, BP PLC (BP) gained over 3% after the oil major
reported a more than three-fold rise in profit for the first
quarter, lifted by profits from the sale of its Russian joint
venture TNK-BP. But the FTSE 100 index fell 0.3% to 6,440.52.
The FTSE was held back by a more than 2.3% drop for Centrica PLC
, which was cut to underperform from neutral at Credit Suisse.
Shares of Unilever PLC fell nearly 1%. The group said it will
increase its stake in its India unit, Hindustan Unilever, from
52.48% to 75%.
The French CAC 40 index was flat at 3,866.61.
Italy's FTSE MIB index fell 0.2% to 16,887.58, after it gained
2.2% in the prior session on political optimism. In an interview
with Reuters, industry minister Flavio Zanonato said the new
government wants to renegotiate its stability pact with the
European Union. New Italian Prime Minister Enrico Letta won a
confidence vote the previous day after promising his government
will work to change the pace of Europe's austerity policies, and
try to lift his own country out of recession, according to media
reports.
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