By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets struggled for direction in a choppy session on Tuesday, with major banks declining after the European Central Bank revealed details on how it will carry out its stress tests on the region's biggest lenders.

The Stoxx Europe 600 index closed marginally higher at 331.49, after swinging between gains and losses for most of the trading day. U.S. stocks drifted lower in a choppy session.

Richard Perry, market analyst at Hantec Markets, said the markets lacked major data points or news to drive stocks higher and that more volatile trading in tight ranges could be expected over the next few weeks. He explained that the second week of the month tends to be quiet, with the central-bank meetings and employment data happening in the first week, while PMIs and inflation data come later. Additionally, the earnings season is more or less over, so investors are short on both corporate news and macroeconomic data to provide more direction.

Banks weighed on the benchmark on Tuesday, with shares of Barclays PLC (BCS) down 2.4% in London, Deutsche Bank AG (DB) off 0.8% in Frankfurt, and Société Générale SA 1.2% lower in Paris.

The losses came as the ECB in a 285-page manual laid out how staff will undertake the Asset Quality Review of the 128 euro-zone banks currently under review. As part of the assessment, the central bank gets tough on risky assets and will look for capital shortfalls at the banks by examining 3.72-trillion euro ($5.16 trillion) worth of risk-weighted assets in the currency bloc.

Also in banking news, AIS Capital Management has filed a lawsuit against the five banks that set the London gold fix, claiming that the banks conspired to rig gold prices, according to The Wall Street Journal. The legal action follows another lawsuit by New York trader Kevin Maher, who also has alleged the banks manipulated the price benchmark.

On a more upbeat note, BMW AG inched 0.9% higher after the German car maker said group sales rose 5.6% in February compared with the same month last year, marking its best-ever February sales result.

Other car makers also rose, with Volkswagen AG up 1.3% and Daimler AG rising 1.4%.

Among other notable movers on Tuesday, shares of Inchcape PLC advanced 4.2% after the car dealer said full-year sales rose 7.7% and recommended a 20% rise in final dividend.

Shares of Royal Ahold NV slipped 1.5% after the Dutch food retailer said it has agreed to buy Austrian Spar AG's supermarket business in the Czech Republic for 5.25 billion Czech koruna ($270 million).

More broadly, the European Union's banking-union project was in focus as the economics and finance ministers from the member states met for the ECOFIN meeting to discuss the details of the banking-failure framework, the so-called Single Resolution Mechanism. The implementation process and funding for struggling banks remain the sticking points, but Eurogroup President Jeroen Dijsselbloem said after a meeting with the group of euro-zone finance ministers on Monday that they had made "very good progress" on getting closer to an agreement. A statement from the ECOFIN meeting on Tuesday wasn't out at the time of the European market close.

On the data front, numbers from Germany showed imports outpaced exports at the start of the year. Imports rose 4.1% in January, while exports rose 2.2%.

In the U.K., industrial production rose 0.1% in January month-on-month, slightly below analyst expectations and lower than the December improvement.

Germany's DAX 30 index rose 0.5% to 9,307.79, while the U.K.'s fell 0.1% to 6,685.52. France's CAC 40 index dropped 0.5% to 4,349.72.

Shares of Deutsche Lufthansa AG climbed 1.7% in Frankfurt after the airline said passenger traffic rose 1.5% in February compared with the same month last year.

Shares of Hannover Re SE dropped 1.3% outside the main index in Germany after the reinsurance firm posted fourth-quarter operating profit below expectations due to weakness in its life/health insurance business.

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