By Polya Lesova, MarketWatch
LONDON (MarketWatch) — A pan-European stock index finished unchanged on Wednesday after a choppy trading session and as the Bank of England warned that the global growth outlook has worsened since August due to the euro-zone debt crisis.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.11% ended flat at 237.04. It fell 1.6% over the previous two days.
In London, the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.53% fell 0.2% to 5,509.02 after the Bank of England said the prospects for the U.K. economy have worsened and activity could be broadly flat until the middle of next year.
“Concerns about the sustainability of the euro area have intensified, and continue to affect market sentiment, asset prices and bond yields,” said Mervyn King, the Bank of England’s governor.
Chris Williamson, chief economist at Markit, said that there is an increased possibility of more quantitative easing from the central bank .
“If the situation in the euro zone fails to improve, or deteriorates further, then the bank may decide to boost its asset purchases as soon as the December MPC meeting,” Williamson said.
Interdealer broker ICAP PLC dropped 4.7% and was one of the biggest losers in the FTSE 100. The firm said first-half revenue was flat at £867 million. Chief Executive Michael Spencer warned of falling activity levels in October and November, as banks reduce appetite for risk.
Intertek Group PLC /zigman2/quotes/209087067/delayed UK:ITRK -1.15% gained 3.5%. The firm’s reported revenue grew by 26% from Jan. 1 through Oct. 31. Despite the global economic turbulence, all divisions reported good organic revenue growth.
Eastern Europe debt threatens credit ratings
Hungary is vulnerable because households and businesses took out cheap mortgages in Swiss francs and euros that have become increasingly expensive as the forint has plunged. And that means more problems for Austria's banks.
In Italy, the FTSE MIB index gained 0.8% to 15,419.20.
Shares of UniCredit SpA /zigman2/quotes/200769686/delayed IT:UCG +0.31% rose 1.4% after a choppy trading session.
Moody’s Investors Service put UniCredit’s debt ratings on review for possible downgrade.
Separately, UniCredit Chief Executive Federico Ghizzoni told Italian newspaper Corriere della Sera in an interview that he will ask the European Central Bank to explore the possibility of widening the types of collateral it accepts in return for loans as a way of broadening access to central-bank funding. A spokesman for UniCredit confirmed Ghizzoni’s comments.
Italy’s 10-year government bond yield rose above the 7% level Wednesday. The yield had fallen earlier, with several strategists reporting heavy buying of Italian debt by the European Central Bank.
Staffing firms in focus
Staffing firms were in the spotlight Wednesday after a bullish note from HSBC. The broker upgraded its ratings on Randstad Holding N.V. /zigman2/quotes/202421454/delayed NL:RAND +0.91% , Adecco S.A. /zigman2/quotes/201694772/delayed CH:ADEN +0.29% and Michael Page International PLC to overweight from neutral.
Randstad rallied 4.3% in Amsterdam, Adecco gained 3.2% in Zurich and Michael Page climbed 5.8% in London. The three stocks were among the top gainers in the Stoxx 600.
Among the major national benchmarks, France’s CAC-40 /zigman2/quotes/210597958/delayed FR:PX1 -0.59% rose 0.5% to 3,064.90, while Germany’s DAX 30 /zigman2/quotes/210597999/delayed DX:DAX -0.51% fell 0.3% to 5,913.36.
Vivendi S.A. /zigman2/quotes/202179234/delayed FR:VIV -0.25% rallied 5.6% and was the biggest gainer in the CAC-40. The entertainment and telecommunications group reported a 35% drop in third-quarter net profit to 241 million euros ($324 million), as sales slipped 1.6% to €6.78 billion.
Vivendi said it now expects its 2011 adjusted net profit to be above €2.85 billion due to a higher tax bill in France, compared with a previous forecast of above €3 billion. Vivendi confirmed that it will increase its dividend for the fiscal year.
Shares of Bouygues S.A. /zigman2/quotes/202035785/delayed FR:EN +1.16% fell 0.4% in Paris after the telecommunications and construction firm reported Tuesday a 14% drop in nine-month net profit to €794 million, mainly due to the lower contribution from transport and energy-infrastructure firm Alstom S.A /zigman2/quotes/209823934/delayed FR:ALO -3.56% .
In Frankfurt, shares of Infineon Technologies AG /zigman2/quotes/204995926/delayed DE:IFX -0.41% dropped 3%. The chip maker said it has observed increasing caution from customers and it now expects fiscal first-quarter revenue to drop around 10% from the preceding three months.