By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stocks ended a choppy session with a tiny rise Wednesday, tracking modest gains on Wall Street as investors shrugged off euro-zone debt worries.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +1.42% closed 0.2% higher at 269.20. The index gained 0.8% on Tuesday as investors brushed aside negative economic data from Europe and chose to focus instead on hopes for European Central Bank action over the debt crisis.
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Earlier, investors seemed ready to cash in on recent gains, particularly in drug and food stocks. Shares of French drug group Sanofi SA /zigman2/quotes/206928357/delayed FR:SAN -1.18% /zigman2/quotes/201967021/composite SNY -0.59% fell 1.7%.
Neil Wilkinson, who manages the £471 million London European growth fund at Royal London Asset Management, said markets are thin, with many market players on vacation or about to take vacation.
That leaves space for some near-term profit-taking, he said.
“Markets have moved pretty substantially in a short space of time,” Wilkinson said. “We’ve had an 8% to 9% move in euro terms since [European Central Bank President Mario] Draghi made his comment [that] ‘We will do whatever it takes to preserve the euro’ about eight or nine trading sessions ago.
“That’s a fairly significant move,” he said. “There is an element of profit-taking, and I’ve certainly done some of that. I’ve trimmed back holdings in financials and autos that have moved a lot. We’ve had a lot of news flow in a short space of time and an awful lot of second-quarter results as well.”
Wall Street initially appeared vulnerable to profit-taking pressures, but later turned slightly positive. See: U.S. stocks steady after three-day rise.
The news that did flow Wednesday included a cut by the Bank of England of its growth and inflation forecasts in a quarterly inflation report. Economists predicted the central bank would make such moves, which may pave the way for further monetary easing. See First Take: Best hope for U.K.? That King’s wrong again.
Shares of ING Groep N.V. /zigman2/quotes/203351007/delayed NL:INGA +0.71% fell 1.3% in Amsterdam after the bank reported a profit decline. The company said it was taking “aggressive” steps to cut its exposure to Spain.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.27% ended 0.1% higher at 269.20.
Shares of banking group Standard Chartered PLC /zigman2/quotes/200125072/delayed UK:STAN +0.51% /zigman2/quotes/202369078/delayed HK:2888 +2.49% rallied 8.6%, a day after a 16% rout. New York’s financial regulator accused the bank of hiding transactions with Iran worth $250 billion on Tuesday. See First Take: Standard Chartered will test a new line.
News reports said other regulators were angry with the New York State Department of Financial Services for going it alone and accusing the bank of laundering money for Iranian institutions. Reuters reported that the U.S. Treasury Department and the Federal Reserve were given no notice of the impending action by the regulator. Read Market Pulse: Other regulators angry over StanChart move.
Also providing support in London, shares of Rio Tinto PLC /zigman2/quotes/208934945/delayed UK:RIO +1.26% /zigman2/quotes/202627887/composite RIO +1.47% rose 2.9%. The mining group reported a 22% fall in first-half profit as metals prices fell and spoke of near-term uncertainty but said it was confident about demand in the long run.
Italian premier talks tough
Mario Monti tells Alessandra Galloni that European Central Bank chief Mario Draghi is “morally and politically” protected in making bold moves at the right moment.
The Spain IBEX 35 index /zigman2/quotes/210597995/delayed XX:IBEX +0.50% fell 0.8% to 7,150.20, giving back some of the 4%-plus gains seen earlier in the week. Banco Santander SA /zigman2/quotes/205677933/delayed ES:SAN +0.66% /zigman2/quotes/202859081/composite SAN +2.05% trimmed an earlier loss to decline 0.1% and BBVA SA /zigman2/quotes/209653399/delayed ES:BBVA +0.68% slipped 0.3%. Each has gained around 7% this week.
Markets have gained ground in recent sessions on the view that the European Central Bank will step in with bond-buying purchases of hard-hit countries like Spain based on the outcome of the last central-bank meeting. See Matthew Lynn column: Don't get suckered in by the Draghi put.
As a reminder of the effect the crisis is having across Europe, Swedish security-services company Securitas AB /zigman2/quotes/203151739/delayed SE:SECU.B +5.89% said it may have to terminate Spanish contracts because it is worried clients may not be able to pay their bills. It also reported a lower second-quarter net profit than in the year-earlier period. Shares of Securitas fell 8.8%. See: Securitas CEO prepares for more pain in Spain.
The Greece ASE Composite index /zigman2/quotes/210597948/delayed GR:GD +0.46% fell 1.4% to 611.50. S&P said late Tuesday that it was cutting Greece’s ratings outlook to negative from stable on the view the country may not be able to secure further bailout funds from the European Union and International Monetary Fund. See: S&P lowers Greece ratings outlook to negative.
Led by losses for Sanofi, the French CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +1.64% fell 0.4% to 3,438.26. Shares of supermarket operator Carrefour SA /zigman2/quotes/208564127/delayed FR:CA -0.91% fell 1.7%, after rallying more than 6% so far this week. I
Automobile group Peugeot SA /zigman2/quotes/203546414/delayed FR:UG -4.21% rose 2% in Paris. Japan’s Mitsubishi Motors Corp. /zigman2/quotes/202404490/delayed JP:7211 +3.17% reportedly said Wednesday that it has “temporarily” halted shipments of its i-MieV electric car to the French group due to adjustment of inventory.
The German DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +1.62% fell 1.8 points, or less than 0.1%, to end at 6,966.15, with shares of airline Deutsche Lufthansa AG /zigman2/quotes/205496028/delayed DE:LHA +0.72% down 3%. Members of the air-cabin-crew union UFO voted for a strike, with talks between the body and Lufthansa set to resume Aug. 16.
Financials also fell in Frankfurt, with Deutsche Bank AG /zigman2/quotes/205584254/delayed DE:DBK 0.00% /zigman2/quotes/203042512/composite DB +0.54% down 0.4%. Car makers pulled back from recent gains, with Volkswagen AG /zigman2/quotes/204309985/delayed DE:VOW3 +0.33% down 1%.