By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stock markets ended lower
Tuesday, with banks and reinsurers leading the move to the
downside. Fresenius Medical Care AG & Co. KgaA was among the
biggest decliners.
The Stoxx Europe 600 index fell 0.4% to close at 287.13,
following a gain of more than 1% in the Monday session, after
upbeat economic data in Europe and the U.S.
Fresenius tumbled 8.7% 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 on Friday. 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 session a day earlier.
"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 4.1% to 22.30 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 under pressure. 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 more than 3% lower. Shares of Munich Re fell 2.7% as it was
dropped to neutral from overweight. Swiss Re AG dropped 1.6% after
being cut to neutral from overweight.
The Athens Composite Index fell down 3.2% to 823.83 after
Reuters reported that the country's international troika of lenders
has given Athens 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, dropping 0.9% to 7,910.77, dragged lower by
Munich Re and Fresenius.
On the upside, shares of Burberry Group PLC rose nearly 3% to
1,405 pence after analysts at 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
slipped 0.1% to close at 6,303.94. Financials were also lower
across the board in Europe, with Lloyds Banking Group (LYG) falling
1.7%.
In Paris, shares of Michelin advanced 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 0.7% to 3,742.57. Pharmaceutical group Sanofi SA (SNY)
fell 1.3%, which dragged the index south, along with a 0.9% loss
for Total SA (TOT). Société Générale SA joined banks in the red
with a 1.2% drop.
In other markets, Portugal's PSI 20 index fell 1.5% to 5,530.42
as bond yields also rose a day after the country's finance
minister, Vitor Gaspar, resigned. Gaspar was seen as a key enforcer
of austerity measures. Banco Espirito Santo SA fell more than
4%.
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