European stocks made a decisive push higher for the first time in afternoon trade on Wednesday, led by oil, food and utilities, after spending much of the session battling negative sentiment fueled by losses for German industrial conglomerate Siemens and weak data from that country.
Major stock indexes were spending much of the day meandering between positive and negative territory until shortly after U.S. markets opened.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) rose 0.7% to 179.48, while the French CAC 40 (FR:1804546: news , chart , profile ) crept up 1.1% to 2,904.96 and the German DAX 30 (DX:1876534: news , chart , profile ) rose 1.3% to 4,241.19.
The U.K. FTSE 100 (UK:UKX: news , chart , profile ) rose 0.5% to 3,901.08.
U.S. markets were trading higher in the wake of positive economic data, with the government reporting an unexpected rise in demand for big-ticket manufactured goods in February.
Financials were all over the map Wednesday.
Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank, said banks are bringing down the rally they started. "What gave this rally steam was the surge in banks. What's taking it down again is banks also. It's all centered around the bailout package for U.S. banks."
He said Europe banks are being affected by fears of anotjer wave of write-downs on U.S. bank balance sheets. "What the market has started to price in from last week is that these toxic assets would be relieved from banks at the current value, and now the market is pricing in slowly, very slowly, that this may not be the case as they have to write further down on their assets," said Blaabjerg.
But also dragging on Europe are worries over the German economy. He noted data out Wednesday showing Japanese exports fell a record 49% in February. "The point is that this is also going to happen for Germany and the Germans know that," he said, noting that there have been downgrades for country growth this week and "many other well-known investment banks are also slashing growth.
A weaker survey on business sentiment from Germany was released earlier in the session. The Ifo business climate index slipped to 82.1 in March from 82.6 in February. See full story.
Analysts at BNP Paribas said the data was disappointing. "The falls in March leave the headline and current conditions indices at their lowest level on record, which emphasizes the intensity of this downturn," said analyst Dominic Bryant, who added that they expect the German economy to contract by 5.4% this year, with risks to the downside.
Adding to gloom, shares of German conglomerate Siemenstumbled nearly 5% after its chief executive officer Peter Loescher reportedly said the company is no longer "immune" to the effects of the global economic crisis in an interview in Handelsblatt newspaper.
The environment has become "significantly worse" since January, Loescher is cited as saying.
Among banks, Fortis Bank BNV was down 3.5% and BNP Paribas (FR:BNP: news , chart , profile ) fell nearly 3%.
Shares of Credit Agricole SA (FR:ACA: news , chart , profile ) dropped 4%. Its Cheuvreux brokerage unit said Wednesday deteriorating market conditions in the first weeks of 2009 led it to implement a recovery plan which includes voluntary redundancies and cost savings.
The U.K.'s Legal & General (UK:LGEN: news , chart , profile ) said Wednesday that it swung to a 2008 net loss and is recommending a 50% cut in the final dividend to 2.05 pence a share. Shares fell 4.6% in London. See full story.
Gains for oil, food
Shares of U.K.'s Premier Oil (UK:PMO: news , chart , profile ) jumped more than 9% after it agreed to buy the North Sea unit of Canada's Oilexo Inc. (CA:OIL: news , chart , profile ) for $505 million to be partly funded by a rights issue of new shares to raise 171 million pounds and new agreed credit facilities.
"Premier has cash on its balance sheet but has been lacking major exploration momentum...it's a very smart move -- the strong picking off the weak," Richard Griffith, analyst at Evo Securities.
Other gainers in the energy sector were shares of U.K-based Dana Petroleum up more than 5% and Spain's Repsol YPF SA which tacked on 2.8%.
Total SA rose 2.3%.
Another bright spot was Swiss food giant and market heavyweight Nestle SA with shares up more than 3% in Switzerland.
But shares of U.K. supermarket operator J Sainsbury (UK:SBRY: news , chart , profile ) fell 1.3%. It said Wednesday that comparable sales excluding fuel rose 6.2% in the fourth quarter, but that it expects the economic environment to remain challenging.
Also on the wane, U.K. medical and security equipment group Smiths Group (UK:SMIN: news , chart , profile ) tumbled nearly 9% after the group said its first-half net profit fell 23% to 108.6 million pounds. See London Markets story.
From Spain, shares of Inditex SA (ES:ITX: news , chart , profile ) jumped 4.4% as the Spanish retailer reported 2008 net income at 1.25 billion euros ($1.68 billion) in 2008, unchanged from 2007, which was close to market expectations. See full story.
Auto stocks were also in focus as Porsche Automobil Holdings (DE:PAH003: news , chart , profile ) said it's finalized negotiations for a fresh 10 billion euro ($13 billion) credit line, that can be extended to as much as 12.5 billion euros in coming weeks. Porsche shares rose 1.9%
Shares of Peugeot (FR:UG: news , chart , profile ) slid 4.7% after UBS cut the French automaker to sell from neutral by UBS, with the broker saying the firm's debt is increasing, and with few assets to sell, it may need to increase capital and/or do a debt-for-equity swap.
