By Carla Mozee, MarketWatch
European stocks choppy; German political crisis in focus
A broad gauge of European stocks steadied at the end of trade
Thursday, after spending the session struggling to find firm
direction. But French blue-chip shares climbed after data showed
the country led the strengthening in the eurozone economy this
month.
How key gauges moved: The Stoxx Europe 600 closed up less than 1
point at 387.12 after a topsy-turvy session for European equities.
The index had risen as much as 0.2% and lost as much as 0.6%
intraday. The financial and utility sectors closed in the red, but
consumer goods and telecom shares led advancers.
Trading volumes were likely thin, as U.S. markets were closed
for the Thanksgiving Day holiday. On Wednesday, the Stoxx 600 fell
0.3%
(http://www.marketwatch.com/story/ftse-100-on-course-for-3rd-straight-gain-with-uk-budget-on-deck-2017-11-22),
snapping a two-day run of gains.
In Paris, the CAC 40 sloughed off losses and finished up 0.5% at
5,379.54, the highest close since Nov. 10, according to FactSet
data.
In Frankfurt, the DAX 30 index ended down 0.5% to 13,008.55,
adding to the 1.2% slide logged Wednesday.
In Madrid, the IBEX 35 picked up 0.2% to end at 10,032.80 while
in London, the FTSE 100 index fell less than 2 points to 7,417.24
(http://www.marketwatch.com/story/uks-ftse-100-stumbles-after-three-day-advance-2017-11-23).
The euro bought
(http://www.marketwatch.com/story/dollar-languishes-at-1-month-low-with-euro-cheered-by-economic-data-2017-11-23)
$1.1851, up from $1.1824 late Wednesday in New York.
What drove markets: The main stock benchmarks pared losses or
turned higher during the session after upbeat economic data,
including a preliminary report on eurozone services and
manufacturing activity that beat forecasts
(http://www.marketwatch.com/story/eurozone-business-booming-as-pmis-jump-2017-11-23).
The composite Purchasing Managers Index for November rose to
57.5, its highest level since April 2011, said data firm IHS
Markit. Economists widely expected an unchanged reading. France led
the way, with a surprise jump in its services sector PMI to 60.2,
compared with an expected fall to 57.0.
One headwind to stocks was a rise in the euro, which has been
gaining since the U.S. dollar was yanked down Wednesday by
investors concerned about the pace of U.S. interest-rate hikes
(http://www.marketwatch.com/story/fed-doubts-on-inflation-grow-but-rate-hike-likely-soon-minutes-show-2017-11-22).
The upbeat economic data also helped lift the shared currency,
analysts said.
A stronger euro can put pressure on shares of exporters as it
makes products more expensive for holders of other currencies.
Attention was turning to the political turmoil in Germany, even
as fresh figures showed the country's economy expanded in the three
months to September. Pressure is growing on Martin Schulz, the
leader of Germany's Social Democrats, to think again about a
refusal to revive the "Grand Coalition" with Chancellor Angela
Merkel's Christian Democrats.
The country has been thrown into political turmoil after this
weekend's breakdown in talks to form a different, three-party,
coalition government that would keep Merkel at the helm.
What strategists are saying: Traders "are keeping an eye on the
outcome of the meeting between [German] President Steinmeier and
SPD leader Schulz," said Naeem Aslam, chief market analyst at Think
Markets, in a note.
"German party leaders do feel that they have a responsibility to
form a government and the SPD leader has said that he is open for
another round of talks with Merkel," Aslam said. "If we do see more
tangible progress which helps Merkel to finally form a coalition,
we do think that the euro could move higher and the EUR/GBP could
surpass the mark of GBP0.90."
"In the short term, the impact from the current political
impasse on the German economy should be (close to) zero. For the
longer term, however, given the lack of structural reforms and the
urgent need for investments in digitalization and education, German
politicians should not waste too much time if they don't want to
put the economy's future at risk," said Carsten Brzeski, chief
economist at ING, in a note.
Stock movers: Centrica PLC shares (CNA.LN) plunged 15.5% to the
bottom of the Stoxx 600, after the parent company of British Gas
warned that its energy supply businesses have had a disappointing
second half
(http://www.marketwatch.com/story/centrica-says-on-track-to-hit-2017-targets-2017-11-23).
It also gave a full-year adjusted earnings outlook that was below
the market consensus.
Thyssenkrupp AG (TKA.XE) leapt 4% as the German conglomerate's
fiscal 2017 adjusted earnings before interest and taxes rose 30% to
EUR1.91 billion, exceeding a FactSet consensus forecast of EUR1.74
billion.
Altice NV shares (ATC.AE) jumped 3.9% following a Financial
Times report that the French telecommunications company is seeking
to sell its telecom network in the Dominican Republic.
Remy Cointreau SA (RCO.FR) fell 1.7% even as the company said
first-half net profit rose to EUR89.2 million ($105 million) on
stronger sales of its Remy Martin cognac
(http://www.marketwatch.com/story/remy-cointreaus-earnings-lifted-by-cognac-sales-2017-11-23).
Economic data: Germany's gross domestic product grew at a
quarter-to-quarter rate of 0.8%
(http://www.marketwatch.com/story/german-economy-picked-up-speed-in-3q-2017-11-23)
in the three months through September, or 3.3% in annualized terms,
the Destatis statistics agency said Thursday, confirming
preliminary growth estimates.
France's statistics bureau Insee said its monthly measure of
manufacturing confidence rose one point to 112 in November
(http://www.marketwatch.com/story/french-manufacturing-confidence-at-decade-high-2017-11-23-34855653),
in line with economists' expectations as well as setting a fresh
decade high.
(END) Dow Jones Newswires
November 23, 2017 12:13 ET (17:13 GMT)
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