By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stock markets fell Tuesday,
giving back nearly all of the gains earned in the prior session,
with banks and reinsurers leading the downside. Fresenius Medical
Care AG & Co. KgaA was among the day's worst decliners.
The Stoxx Europe 600 index fell 0.3% to 287.52, following a gain
of more than 1% in the prior session, after upbeat economic data in
Europe and the U.S.
Fresenius tumbled 8% after the U.S. Department of Health and
Human Services said it could cut payments to kidney-dialysis
centers from 2013 forward. Fresenius operates a large network of
dialysis clinics throughout the U.S.
Analysts said traders were growing cautious ahead of central
bank meetings in the U.K. and Europe on Thursday, along with
all-important U.S. payrolls data later this week. Wall Street
stocks opened with losses.
Broker moves were accounting for some of the drop in stocks
Tuesday. Utility company RWE shares fell 3.6% to 22.42 euros after
Morgan Stanley cut shares to equal-weight from overweight and cut
its price target to EUR28 from EUR36 a share. Analyst Bobby Chada
cited a tough operating environment and higher-than-expected
leverage, and said there is little scope for a power-price
rebound.
Insurers were also in a negative spotlight. J.P. Morgan Cazenove
said it expects a 10% decline in natural catastrophe reinsurance
and sees flat rates on other reinsurer lines, and reduced its 2014
earnings-per-share estimates for key reinsurers. In light of this,
Hannover Re SE was cut to underweight from neutral, leaving shares
nearly 3.5% lower. Shares of Munich Re fell 2.7% as it was dropped
to neutral from overweight. Swiss Re AG dropped 2.3% after being
cut to neutral from overweight.
The German DAX 30 index was among the leading decliners among
regional European indexes, down 1.2% to 7,888.75, dragged by Munich
Re and Fresenius. Siemens AG (SI) fell 1.2%, reversing a chunk of
Monday's gains that came from news it's buying Nokia Corp.'s (NOK)
stake in telecom equipment venture Nokia Siemens Networks.
Pharmaceutical group Bayer AG lost 1%.
On the upside, shares of Burberry Group PLC rose 3.3% to 1,410
pence after HSBC lifted the luxury retailer to overweight from
neutral, and its price target to 1,750 pence from 1,530 pence.
The FTSE 100 index was still under water, down 0.45 to 6,282.53.
Financials were also lower across the board in Europe, with Barcays
PLC (BCS) stumbling 1.3% and Lloyds Banking Group (LYG) falling
1.4%.
Shares of Michelin added 1.5% after UBS upgraded shares to buy
from neutral, saying the tire company is only part of the way
toward improving its cost positions significantly. Analyst Philippe
Houchois also said its more-aggressive pricing on light-vehicle
tires is positive.
Those gains weren't enough to support the French CAC 40 index ,
which fell 0.7% to 3,741.90. Again in the drug sector, shares of
Sanofi SA (SNY) fell 1.3%, which dragged the index south. Societe
Generale SA joined banks in the red with a 1.8% drop.
In other markets, Portugal's PSI 20 index fell 0.9% to 5,563.16
as bond yields also rose in the country a day after the country's
finance minister, Vitor Gaspar, resigned. Gaspar was a key enforcer
of austerity measures. Banco Espirito Santo SA fell 2%.
Greek stocks outstripped Germany with losses. The Athens
Composite Index fell 2.2% to 832.48, after Reuters reported that
the international "Troika" of lenders has given the country a
three-day ultimatum over its bailout. Greece is facing a risk that
its much-needed EUR8.1 billion bailout ($10.59 billion) could be
delivered in three monthly payments rather than a lump sum. In
Athens, the Hellenic Telecommunications Organization SA fell
2.6%.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires