Tesco shares up after supermarket giant reports forecast-beating U.K. sales
LONDON (MarketWatch) -- European shares traded in a tight range on Tuesday, as a turnaround for oil majors, strong gains from U.K. supermarket giant Tesco and a possible merger for British Airways countered more losses for mineral extractors.
The pan-European Dow Jones Stoxx 600 index traded down 0.4% at 193.21 as Rio Tinto shares fell 8.9% and BHP Billiton declined 5.4%.
Miners led the Stoxx 600 to sharp losses on Monday when dismal manufacturing data from the U.K., Europe, the U.S. and China showed a sharper-than-expected drop-off activity.
On Tuesday, data showed industrial producer prices across the 15-nation euro zone saw a monthly decline of 0.8% in October. Economists were forecasting a 0.3% monthly drop.
"As we are in the midst of the largest market fall since the Great Depression, it's an understatement that the outlook is extremely uncertain," said European equity strategists at J.P. Morgan.
With investor confidence at a record low, they said, "one does not get paid to be bearish on equities in 2009" and advised buying on dips.
Beaten-down oil majors gaining on Tuesday included Total , up 1.4%, and Repsol , up 2.1%, as light sweet crude futures rose 62 cents to $49.89 a barrel.
On a national level, the German DAX 30 index rose 0.7% to 4,428.49, helped by a rise of 5% for Volkswagen shares.
Other indexes were flattish, with the U.K. FTSE 100 index down 0.3% at 4,054.23 and the French CAC-40 index steady at 3,082.53.
U.S. stocks rose at the open on Tuesday, a day after the Dow industrials saw their fourth-biggest point drop on record, as investors turned to prospects for a bailout of the ailing auto industry. See U.S. Market Snapshot. See story on autos.
Tesco shines
Tesco is one company that appears to be coping in a tougher environment.
Shares of the British supermarket giant jumped 9.3% after 13-week total sales rose 11.7% and U.K. comparable sales advanced a forecast-beating 2%. See Tesco story.
"The results were reassuring across the board," noted analysts at Credit Suisse.
Continental rivals also advanced, with Delhaize up 3.5% in Belgium.
British Airways shares surged 10.8% after it said it's holding merger talks with Australia's Qantas Airways. A deal could combine two of the world's best-known international carriers. See full story.
At the same time, British Airways is continuing talks with Spain's Iberia . Iberia shares climbed 4.7%.
Royal Bank of Scotland shares stood out in the banking sector, up 8.2% after Merrill Lynch started coverage on the lender with a buy recommendation.
"The investment case for RBS rests on a view that it has the options and the appetite to restructure next year," the broker said.
Deutsche Telekom shares climbed 2.7%.
Chief Financial Officer Karl-Gerhard Eick will leave the firm next year to work for another company. Eick has been CFO of the firm since 2000.
Alcatel-Lucent, the Paris telecom-equipment producer, jumped 2.4%
Its Chinese affiliate, Alcatel Shanghai Bell, secured a $230 million contract to increase the capacity and coverage of China Telecom's CDMA-technology mobile voice and data network in China.
