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 0.4% to 287.11, 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 shook
off early losses Tuesday in its last full session before the
Independence Day holiday on Thursday, gaining on factory orders and
car sales.
Europe trimmed some losses, but still stayed in the red after a
blockbuster prior session.
"It seems people are doing a selective bit of buying," said
Joseph Neighbour, trading analyst at Central Markets, who notes
that some key levels on some indexes, like 3,600 for the French CAC
40, are holding.
"No doubt bull markets are still in play. What the market was
doing prior to that was going up every single day without pullbacks
whatsoever," said Neighbour. Still, he said investors seem to be
now just looking to pick up stocks a bit cheaper than they have
been.
Broker moves were accounting for some of the action on Tuesday.
Utility company RWE shares fell 4% to 22.32 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.
Hannover Re SE was cut to underweight from neutral, leaving
shares 4% down. Shares of Munich Re fell 2.7% as it was dropped to
neutral from overweight. Swiss Re AG dropped 2.5% after being cut
to neutral from overweight.
The index moving hardest sounth was the Athens Composite Index ,
down 3.2% to 823.83, 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 sank 3.5%.
The German DAX 30 index was another big decliner among regional
European indexes, down 0.8% to 7,876.80, 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% to 1,406
pence after HSBC lifted the luxury retailer to overweight from
neutral, and its price target to 1,750 pence from 1,530 pence.
Faring better than most rival indexes, the FTSE 100 index was
flat at 6,306.11. Financials were also lower across the board in
Europe, with Lloyds Banking Group (LYG) falling 1.3%.
In Paris, shares of Michelin added more than 2% 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 0.6% to 3,744.45. Pharmaceutical group Sanofi SA (SNY)
fell 1%, which dragged the index south, along with a 1% loss for
Total SA (TOT) . Societe Generale SA joined banks in the red with a
1.4% drop.
In other markets, Portugal's PSI 20 index fell 0.6% to 5,582.30
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 over 2%.
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