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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