By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stock markets ended lower Monday as investors awaited a speech by U.S. Federal Reserve Chairman Ben Bernanke, while shares of TNT Express NV plunged after United Parcel Service Inc. said European regulators would block its proposed acquisition of the Dutch package-delivery company.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -1.37% fell 0.4% to close at 286.01. The index posted a 0.3% loss last week.
Stocks approach five-year high
U.S. stocks erased earlier losses to head into Friday's close virtually unchanged, as a pullback in bank stocks following Wells Fargo's earnings offset optimism around stimulus in Japan.
Coloring the trading in Europe, stocks traded mixed on Wall Street, with shares of Apple Inc. /zigman2/quotes/202934861/composite AAPL -2.13% under pressure after news reports said the company had cut orders for components used in its iPhone 5 due to weaker-than-expected global demand. Read more about U.S. stocks.
Shares of TNT Express plunged more than 41% and PostNL /zigman2/quotes/202156074/delayed NL:PNL -1.14% plummeted nearly 36%, upended as UPS /zigman2/quotes/201245396/composite UPS -1.40% said the European Commission would refuse to approve the U.S. logistics group’s proposed $6.8 billion buyout of TNT Express over competition concerns. PostNL has been attempting to dispose of its nearly 30% stake in TNT. Read: UPS expects EC to block TNT Express deal.
In Paris, shares of Société Générale SA /zigman2/quotes/206663756/delayed FR:GLE +2.06% rose 3.8% and Credit Agricole SA /zigman2/quotes/209264506/delayed FR:ACA -0.88% added 3%. Credit Suisse upgraded the French banks to overweight, citing positive effects of 2012 asset disposals and inexpensive valuations relative to peers.
Credit Suisse analysts also said they were positive on Crédit Agricole’s strategy of refocusing on its core franchise.
The banking-sector gains helped the French CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -1.26% eke out a 0.1% rise to 3,708.25.
Also higher in Paris, shares of Compagnie de Saint-Gobain SA /zigman2/quotes/201813666/delayed FR:SGO -2.35% rose 0.4%. The company said Ardagh Glass Ltd. has made a “binding and irrevocable” offer valued at $1.69 billion for the French conglomerate’s North American unit, which makes glass bottles and jars. Read: Saint-Gobain: $1.69 billion offer for Verallia.
In other deal news, shares of Swatch Group AG /zigman2/quotes/203516858/delayed CH:UHR -1.38% rose 4.1% after the Swiss watch company said it paid $750 million for the jewelry and watch brand of Harry Winston Diamond Corp. of Toronto. Swatch also assumed as much as $250 million of pro forma net debt. Read more on the Swatch deal
Evans remarks; Bernanke next
European stocks got an early boost after comments from Charles Evans, president of the Federal Reserve Bank of Chicago. Media reports said Evans predicted the U.S. economy will grow by 2.5% in 2013, improving to a 3.5% growth rate for gross domestic product in 2014. Read: Monetary policy needs to boost growth: Fed's Evans
Coinciding with the close of U.S. trading on Monday, Fed chief Ben Bernanke will give a speech in Ann Arbor, Mich., with a question-and-answer session to follow.
Stephen Pope, managing partner at Spotlight Ideas, said equities in Europe can attribute some recent gains to hopes that all central banks, but crucially the Fed, will “remain tilted toward intervention,” as growth in developed economies remains tepid.
“If the sense that they will stay engaged is perceived then the expectation that investors will achieve their desired rates of return on capital deployed then we will see steady gains as carefully selected ‘risk-on’ assets dominate the early 2013 asset allocation decisions,” Pope said in emailed comments.
“Be wary of fast-moving stocks that over the medium term are unable to be price makers,” he said. “Bottom line is going to be vastly more important in 2013 than top line. Cost control [and] liquidity will still dominate.”
Among other regional indexes, the DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.90% rose 0.2% to 7,729.52 in Frankfurt, led by shares of German chemicals group BASF SE /zigman2/quotes/204280060/delayed DE:BAS -1.04% , up 1.1%. Deutsche Bank said BASF remains its top pick in this space, rated a buy. Linde AG /zigman2/quotes/203890251/delayed DE:LIN -0.79% also ranks among its top picks, with a buy rating.
Linde rose 1.6%.
Shares of Volkswagen AG /zigman2/quotes/204309985/delayed DE:VOW3 +0.46% gave up an earlier gain to lose 0.1%. Société Générale said it believes the auto maker will continue to outperform in all major markets, but it did reduce earnings forecasts on the group. Volkwagen’s 2013 earnings before interest and taxes forecast was cut to €14.4 billion from €15.8 billion.
In London, the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -1.82% lost 0.2% to finish at 6,107.86. Broker action also commanded much of the action for the index.
Shares of Eurasian Natural Resources Corp. PLC , traded 3.5% higher. Credit Suisse analysts upgraded its rating to outperform from neutral, saying they believe that downside risks are now limited and that there are potential re-rating catalysts this year.
Heavyweight GlaxoSmithKline PLC /zigman2/quotes/209463850/composite GSK +0.75% /zigman2/quotes/200381158/delayed UK:GSK -1.40% fell 0.7%. The pharmaceutical said Monday that it submitted a diabetes drug candidate for scrutiny before the U.S. Food and Drug Administration. Read more about trading action in London.