By Steve Goldstein
European stocks hovered around the flat line on Wednesday in light trade before the Federal Reserve's interest-rate decision as a bevy of companies hit shareholders for cash to rebuild recession-battered balance sheets.
The pan-European Dow Jones Stoxx 600 index, which basically see-sawed during the first two days of the week, edged up 0.1% to 244.50, with a key U.S. interest rate decision coming after the close of trade on European bourses.
Markets aren't expecting any movement on U.S. rates but will closely scrutinize the accompanying statement from the Federal Open Market Committee for any comment on exit strategy.
Minutes from the last Bank of England meeting that were released Wednesday suggest the U.K. central bank will stay on the sidelines until at least November, analysts said. ( See related article.)
Banks led the rise. Unicredit /zigman2/quotes/200769686/delayed IT:UCG -0.35% , which reportedly is weighing capital raising moves, rose 3.1%, while several Greek banks including Alpha Bank rose after a positive note from Merrill Lynch.
Oil producers including Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA +0.25% , which fell 1.6%, declined after data showed rising U.S. inventories and a sharp drop in demand.
Meanwhile, economic data that was slightly disappointing, particularly from Germany, didn't do much to deter stocks. The Markit preliminary euro-zone composite purchasing managers index rose to a 16-month high of 50.8 from 50.4 in August, less than forecasts for a rise to 51. A reading of less than 50 signals that activity is contracting, while a figure of more than 50 indicates expansion. ( See related article.)
While the Stoxx 600 finished higher, the three major regional indexes finished weaker.
The German DAX Xetra slipped 0.1% to 5702.05, the U.K. FTSE 100 index weakened 0.1% to 5139.37 and the French CAC-40 index closed a touch lower at 3821.79.
The focus on Europe in an otherwise quiet day was on share sales as U.K. house builders Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV -1.98% and Redrow /zigman2/quotes/206663416/delayed UK:RDW -2.27% announced plans to raise around £870 million ($1.42 billion) between them. Shares of Barratt edged up 2.8% to 276 pence as the firm said it plans to raise £720.5 million through a fully underwritten placing-and-rights issue, which refers to selling discounted stock to existing investors. Redrow shares dropped 2.7% to 227 pence after saying it plans to raise £150 million in a rights issue.
Liberty International weakened 10% to 507 pence as the U.K. real estate investment trust sold 56.1 million new shares for 500 pence each. Proceeds from the sale will be used to resume investment in the group's regional shopping centers and central London assets. British Land /zigman2/quotes/210491538/delayed UK:BLND -2.02% , which holds Liberty shares, fell 4.5%. The company also said that its head of retail, Andrew Jones, is considering leaving.
Yell Group fell 14% after the directories publisher said it's going to raise up to £800 million through selling stock.
Qiagen /zigman2/quotes/208965936/delayed DE:QIA +0.14% fell 3.7% as the biotech said it's going to place up to 27.5 million shares.
Freenet slumped 9.8% after private-equity group Permira sold 19.1 million shares in the German telecom.
Meanwhile, UBS turned bitter on the pubs sector, saying it's overvalued because their shares are trading "at or higher than their historic averages."
Enterprise Inns, Marston's /zigman2/quotes/203821737/delayed UK:MARS -2.30% , Greene King and Mitchells & Butler all were cut to "sell" and each dropped, with Enterprise Inns leading the downturn with a 7.8% slide.
Write to Steve Goldstein at firstname.lastname@example.org