By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets on Tuesday
bounced back from the previous day's sharp selloff after
better-than-expected euro-zone data, while investors also digested
earnings reports from some of the region's heaviest hitters.
The Stoxx Europe 600 index rose 0.6% to close at 285.56,
climbing back after closing at its lowest level in 2013 on
Monday.
"We had a sharp fall yesterday, so it's not surprising to see
markets back upward today," said Neil Wilkinson, senior fund
manager at Royal London Asset Management.
"I was feeling somewhat nervous last week. We had seen markets
re-rate upward pretty rapidly in January and for this to continue
we will need to see earnings being upgraded," he said. "We still
have a fair chunk of corporations left to report and what they say
about the world is important. A big question is if we'll see more
downgrades."
And in that vein, shares of ARM Holdings PLC (ARMHY) jumped 4.4%
after the chip maker posted a 19% rise in fourth-quarter revenue
and said it was off to a good start in the new year.
Shares of Munich Reinsurance Co. gained 3.9%. The German company
said it plans to raise dividends to 7 euros ($9.47) per share from
EUR6.25.
On a downbeat note, shares of Royal KPN NV sank 16%. The Dutch
telecom firm said it would raise 4 billion euros ($5.4 billion) in
a rights issue to cut debt, which surged after an expensive auction
for high-speed mobile spectrum.
The broader gains for European equities came after investors
fled the region's bourses on Monday, as political jitters in Italy
and Spain rattled sentiment and stoked new concerns of a euro-zone
breakup.
In Spain, the opposition party called for Prime Minister Mariano
Rajoy to resign amid allegations of corruption, fueling fears of a
general election that could pave the way for anti-euro parties.
The IBEX 35 index slid 3.8% on Monday, but jumped 2.2% to
8,093.60 on Tuesday, with shares of Banco Santander SA (SAN) up
3%.
In Italy, former Prime Minister Silvio Berlusconi vowed he would
cut taxes if his coalition wins the general elections later this
month, sending Italian sovereign bonds and equities tumbling on
Monday.
"From a market perspective it would be a concern if Italy would
not continue with its austerity program, which would create
nervousness in the sovereign bond market. Domestic banks are big
holders of those bonds and would be impacted, so this could be a
potential trigger point," said Wilkinson from Royal London Asset
Management.
The FTSE MIB index rallied 1.1% to 16,712.26, after shaving off
4.5% on Monday.
Euro-zone data was also in focus. The final composite purchasing
managers' index for the region rose to 48.6 in January, marking a
ten-month high and coming in above an earlier estimate of 48.2. The
index still indicated the private-sector economy deteriorated, but
that the pace of the decline eased. .
In the U.S., the ISM services index fell to 55.2 in January from
55.7 in December. .
U.S. stocks opened higher on Wall Street. .
Movers
Among notable movers in Europe, shares of Alfa Laval AB jumped
4.7%, after the heat-equipment firm said its order intake rose 7%
in the fourth quarter.
Shares of UBS AG (UBS) inched 0.1% higher, after the Swiss bank
posted a 1.9 billion Swiss franc ($2.09 billion) fourth-quarter
loss. It also said it was making progress in restructuring its
investment-banking unit. .
In the U.K., shares of BP PLC (BP) gained 1.4%, as Chief
Executive Bob Dudley said the company was now on track to resume
growth, after fourth-quarter profit dropped 72%, but exceeded
market expectations. .
Shares of BG Group PLC added 3.4%, even as the energy major
posted a 29% drop in fourth-quarter earnings and said it would miss
its production target of producing 1 million barrels of oil
equivalent a day by 2015. .
The FTSE 100 index gained 0.6% to 6,282.76. .
France's CAC 40 index rallied 1% to 3,694.70. Shares of drug
maker Sanofi SA (SNY) rose 1.5%, after European Union regulators
approved the firm's Zaltrap drug to treat bowel cancer.
Pernod Ricard SA lost 0.8%. Bank of America Merrill Lynch cut
the spirits maker to underperform from neutral, citing likely
disappointment with the earnings results due later in the
month.
In Germany, shares of Deutsche Bank AG (DB) rose 1.4%. The DAX
30 index added 0.4% to 7,664.66.
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