By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stocks notched slight gains on Tuesday as investors parsed conflicting economic data from the United States and looked ahead nervously to the European Central Bank’s second offer of three-year loans to banks on Wednesday.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.35% closed 0.2% higher at 264.33, after trading as high as 265.03 and as low as 262.61 earlier in the session.
Posting the biggest gain in the index, Persimmon PLC /zigman2/quotes/206444744/delayed UK:PSN +0.71% surged 12.7% in London after the home builder said it expects strong sales going forward and plans to return 1.9 billion pounds ($3 billion) of cash to shareholders in dividends from 2013 to 2021.
Spain sees need to adjust 2012 fiscal targets
Spanish Economy Minister Luis de Guindos speaks with Michael Casey about his country's bid to renegotiate tough deficit targets set by the European Union.
In the broader European stock market, banks and miners pushed sentiment north in afternoon trade after a gauge for U.S. consumer confidence rose to 70.8 in February, the highest level in a year, according to the Conference Board.
Data released earlier in the day, however, pointed to a different mood and stocks were sent south after disappointing data for orders for U.S. durable goods spurred concerns about the recovery in the world’s largest economy. Orders fell 4% in January, more than the 1.3% drop economists had expected.
U.S. stocks traded higher on Wall Street.
“A steep drop in U.S. durable goods orders in January undoubtedly represents a disappointing start to the year,” said Chris Williamson, chief economist at Markit, in a note.
”The big question is whether the downturn in January is merely a statistical wobble in what we must remember is a very volatile data series, or whether demand for U.S. goods really slumped at the start of 2012.”
Oil stocks were among the biggest decliners after the data, and Tullow Oil PLC /zigman2/quotes/205079109/delayed UK:TLW -2.79% lost 1.5%, BG Group PLC shed 0.5%, while BP PLC /zigman2/quotes/207305210/composite BP +0.06% was off 0.5% in London.
The U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.26% traded 0.2% higher at 5,927.91, supported by miners. Vedanta Resources PLC gained 1.7%, Evraz PLC /zigman2/quotes/202291633/delayed UK:EVR -12.59% added 3.6% and Rio Tinto PLC /zigman2/quotes/208934945/delayed UK:RIO +0.40% /zigman2/quotes/202627887/composite RIO +2.79% rose 0.8% on the back of higher metals prices.
Banks swing between gains and losses
Bank shares seesawed between gains and losses during the day ahead of ECB’s second three-year long-term refinancing operations, which will be allotted Wednesday. At the first LTRO in December, banks borrowed 489 billion euros ($657 billion), which boosted liquidity in the euro zone and analysts expect Wednesday’s lending round to reach approximately the same amount.
“We saw that the last LTRO pushed up risk assets and put a more positive light on European banks,” said Oliver Wallin, investment director at Octopus Investments. “This time it could be a win-win situation. It’s possible that banks could ask for more and go beyond €700 billion, which would give the market more liquidity. And if they ask for less than €400 it shows that banks are in better shape than expected.”
Also in Paris, Peugeot SA trimmed an earlier gain of 9.5% and was up 0.4% after The Wall Street Journal reported the French car maker plans to raise roughly €1 billion related to a new alliance it is negotiating with General Motors Co. /zigman2/quotes/205226835/composite GM +0.63% . A spokesperson from Peugeot was not immediately available to comment.
The CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +0.09% rose 0.4% to 3,453.99, further buoyed by semiconductor maker STMicroelectronics NV /zigman2/quotes/204485995/delayed FR:STM +1.14% , which added 6.9%. Prices of memory chips for personal computers rose Tuesday after Japanese chip maker Elpida Memory Inc. filed for bankruptcy late Monday, boosting hopes for tighter global supply.
Volatility in Europe’s stock markets was increased after the ECB said it has temporarily suspended Greek government debt for use as collateral in its lending operations, after Standard & Poor’s declared Greece was in selective default late Monday.
The Athens General Index /zigman2/quotes/210597948/delayed GR:GD +0.16% dropped 3% to 727.14, pulled lower by National Bank of Greece SA /zigman2/quotes/203923076/delayed GR:ETE +0.58% , which fell 6.7%.
Among other banks, KBC Group NV /zigman2/quotes/209494285/delayed BE:KBC +0.33% jumped 4.7%. KBC and Spain’s Banco Santander SA , which closed marginally lower, said they plan to merge their Polish operations Bank Zachodni WBK SA and Kredyt Bank SA in an all-share deal.