Oil shares trade higher, but autos come under pressure
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — European stocks turned lower Thursday after an unexpected drop in U.K. retail sales and as auto stocks came under pressure, though German conglomerate Siemens made gains after a bullish assessment from brokers.
The Stoxx Europe 600 index (ST:SXXP 264.34, -1.20, -0.45%) slipped 0.5% to 264.35, with gains for oil and gas shares helping partially offset broad declines in most other industries.
In the energy sector, shares of both BP (UK:BP. 412.25, +8.15, +2.02%) (BP 38.62, +0.44, +1.15%) and Royal Dutch Shell (UK:RDSA 1,882, +21.00, +1.13%) (RDS.A 58.34, +0.51, +0.88%) rose 1.3% in London trading.
Among the regional indexes, the U.K.’s FTSE 100 index (UK:UKX 5,543, -12.91, -0.23%) was down 0.1% at 5,550.95 and the French CAC 40 index (FR:PX1 3,745, -10.83, -0.29%) slipped 0.3% to 3,745.76.
“We’ve had three fairly uninspiring days in a row. The battle is now to hold on to the gains from the last few weeks,” said Ian Williams, strategist with Altium Securities.
The FTSE 100 has rebounded nearly 9% from its low point toward the end of August, so a period of consolidation is to be expected, said Williams, who added traders will also be watching another round of U.S. economic data later in the session.
U.S. stock market futures were also lower ahead of the data on jobs and producer prices as well as The Philadelphia Fed Index for September. See Indications.
While other indexes were lower, the German DAX 30 (DX:DAX 6,258, -4.12, -0.07%) was broadly flat at 6,262.29 as strong gains for Siemens (DE:SIE 78.60, +2.00, +2.61%) (SI 102.61, +2.90, +2.91%) , shares of which rallied 3.8%, helped support the benchmark.
Morgan Stanley lifted its rating on the conglomerate to overweight from equal-weight, citing a cheap valuation and the potential for stronger dividends. Goldman Sachs also highlighted the stock as one of its so-called conviction buys.
“For those investors who do not believe that European equities are permanently de-rated, this could be a unique buying opportunity for a DAX benchmark,” said Morgan Stanley analyst Ben Uglow in a note.
Car and truck makers were among the biggest decliners in Europe after data from the European Automobile Manufacturers’ Association showed new-car registrations in August dropped 13% from a year earlier, marking the fifth consecutive month of lower sales.
The retreat also came as the U.K. Office of Fair Trading launched an investigation into commercial vehicle manufacturers.
Across the sector, Renault SA (FR:RNO 35.76, -0.64, -1.76%) dropped 1.6%, Fiat (IT:F 10.33, -0.11, -1.05%) fell 1.2% and Volvo (SE:VOLVB 94.40, -1.25, -1.31%) declined 1.4%.
Retail stocks were mostly under pressure after data showed a 0.5% monthly decline in British retail sales in August, significantly worse than the 0.3% increase expected by economists.
Marks & Spencer (UK:MKS 376.60, -3.00, -0.79%) and J Sainsbury PLC (UK:SBRY 376.70, -3.80, -0.10%) both dropped 1.1%.
But home-improvement retailer Kingfisher PLC (UK:KGF 223.90, +5.00, +2.28%) bucked the trend, rising 2.7% in London after the company announced a 24% increase in profit as cost-cutting and a restriction on in-store promotions helped boost margins.
Mining stocks were mostly lower as well, with the exception of Eurasian Natural Resources Corp. (UK:ENRC 904.00, +38.00, +4.39%) , which jumped 4.3% after it was upgraded to outperform from neutral at Credit Suisse.
In deal news,Spanish construction group Actividades de Construccion y Servicios SA (ES:ACS 36.49, +1.69, +4.86%) rose 2.4%. The company made an offer for the rest of shares of Germany’s Hochtief AG (DE:HOT 59.20, +2.75, +4.87%) that it doesn’t already own.
ACS said it would offer 8 of its own shares for every 5 Hochtief shares. Hochtief recently was up 1.8% in volatile Frankfurt trading, having swung between gains of 10.4% and losses of 2.6% during the session.
