Lufthansa drags airlines lower after profit warning
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stock markets ended higher on Tuesday, buoyed by hopes that Greece will get its next round of funding and the Federal Reserve will inject some stimulus into the U.S. economy.
The Stoxx Europe 600 index XX:SXXP +1.84% rose 1.8% to close at 229.10, after snapping a four-day winning streak on Monday with a 2.3% decline.
Global markets rose Tuesday on hopes the Fed may take some action to boost the flagging U.S. economy. The Federal Open Market Committee began its two-day meeting Tuesday.
“We look for the Fed to announce further action to support the economy,” said Duarte Caldas, an analyst with IG Markets in Lisbon.
But market volatility may continue. “All we’re seeing is fits and starts. We get a two or three-day rally that gives way to a profit-taking binge,“ said Stephen Pope, managing partner at Spotlight Ideas.
The International Monetary Fund, meanwhile, cut its forecast for global growth on Tuesday, citing slow private-sector demand, sovereign debt and bank troubles.
The markets shrugged off a cut in Italy’s credit ratings by one notch at Standard & Poor’s. Italy’s FTSE MIB index XX:FTSEMIB +1.91% rose 1.9%, with auto maker Fiat SpA IT:F +7.16% rising 7.2%.
Markets stayed hopeful that Greece would get a fresh injection of aid, amid media reports the country was close to agreement.
A call between Greek Finance Minister Evangelos Venizelos, the International Monetary Fund, the European Commission and the European Central Bank on Monday was “productive.” Another call with the so-called troika will take place on Tuesday.
Still, the ASE Composite index GR:GD -0.71% fell 0.7% in Athens.
French banks under pressure
In Paris, shares of Societe Generale SA FR:GLE -3.08% dropped 3.1%. Among other banks, BNP Paribas SA FR:BNP -6.51% fell 6.5% and Credit Agricole SA FR:ACA -2.11% dropped 2.1%.
The French CAC 40 index FR:PX1 +1.50% still rose 1.5% to close at 2,984.05. It was aided by a 3.2% gain for pharmaceutical group Sanofi SA FR:SAN +3.24% SNY +1.74% after a ruling in its favor by a U.S. district court over India-based Sun Pharmaceutical Industries Ltd IN:524715 +1.96% . The ruling effectively will keep Sun’s generic copies of Sanofi’s colon cancer drug Eloxatin off the U.S. marketplace until August 2012.
Other drug stocks were also on the rise, with GlaxoSmithKline PLC GSK +1.44% UK:GSK +2.18% gaining 2.2%.
The French index was also lifted as luxury-goods group LVMH Moet Hennessy Louis Vuitton FR:MC +3.64% added 3.6%, amid broad gains for the retail sector.
Stoxx 600 heavyweight Hennes & Mauritz AB SE:HMB +4.22% rose 4.2%.
The FTSE 100 index UK:UKX +1.98% gained 2% to close at 5,363.71 as retailers and miners added to gains from drug stocks.
Luxury-goods firm Burberry Group PLC UK:BRBY +3.45% rose 3.5% as London Fashion Week got under way Monday. Kingfisher PLC UK:KGF +2.73% added 2.7%.
Shares of retailer Metro AG DE:MEO +3.10% rose 3.6% in Germany, while sportswear maker adidas AG DE:ADS +3.34% gained 3.7%.
The German DAX 30 index DX:DAX +2.88% rose 2.9% to settle at 5,571.68. Utilities E.On AG DE:EOAN +2.69% and RWE AG DE:RWE +3.66% rose 4% and 3.7%, respectively, after a Hamburg court reportedly questioned the legality of the German nuclear fuel tax on Monday, according to media reports.
On the downside, shares of Deutsche Lufthansa AG DE:LHA -3.81% sank 4.4%, as the airline issued a profit warning that took markets by surprise after weaker-than-expected August results. It said a further rise on the prior year’s operating profit is “no longer achievable.” That news weighed on other airlines, with Air France-KLM FR:AF -3.67% down 3.7%.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
