MW: Europe stocks rise as banks rally after German Ifo
BP leads oil firms lower after an oil spill audit
By Sara Sjolin, MarketWatch
LONDON (MarketWatch)—European stock markets inched higher in a choppy market on Friday, as banks rallied after a surprise rise in a German business-climate index, while BP PLC led oil firms lower after a fresh oil spill claims audit.
The Stoxx Europe 600 index XX:SXXP +0.53% was up 0.4% at 257.34, after swinging between small gains and losses through most of the session.
In the U.S., stocks were also higher in recent trade.
“Investors can see they need to take risks in order to get a return on their investments,” said Henrik Drusebjerg, senior strategist at Nordea Bank. “They know that yields on certain government bonds, like Germany’s, can’t compete with the rate of inflation and that’s an incentive to take risk in the hunt for a return.”
“But markets are fragile in 2012 and as long as the euro zone has such fundamental problems, investors will be nervous and macroeconomic data can easily push stock prices out of course,” he said.
Macroeconomic data helped European markets push higher after the Munich-based Ifo Institute’s business confidence index unexpectedly rose to 109.9 in April.
The German DAX 30 index DX:DAX +1.21% rose 1% to 6,735.80.
Commerzbank AG DE:CBK +1.81% added 1.7% and Deutsche Bank AG DE:DBK -0.71% rose 1.6%.
Chemicals firm BASF SE DE:BAS -0.29% also supported the index and took on 1.3% to 65.88 euros after J.P. Morgan Cazenove lifted the price target on the stock to €61 from €57 a share.
Banks were also moving higher in the U.K. Lloyds Banking Group PLC UK:LLOY +3.04% LYG +2.15% advanced 2.7% and Standard Chartered PLC UK:STAN +0.79% climbed 0.5%.
The FTSE 100 index UK:UKX +0.51% , added 0.3% to 5,758.71, further supported by IMI PLC UK:IMI +1.85% up 1.4% after reporting a 8% jump in quarterly revenue.
Oil firms added pressure on the index, as heavyweight BP UK:BP -0.97% BP -0.73% dropped 1.2%. The U.S. Department of Justice said late Thursday that an independent claims audit found the oil group owes an additional $64 million in payments related to the Deepwater Horizon oil spill in April 2010.
Spain stocks rebound
Spanish stocks rebounded after the IBEX 35 index XX:IBEX +1.88% closed below the 7,000 mark for the first time in three years on Thursday. The index traded 1.2% higher at 6,990.90 on Friday, with BBVA SA ES:BBVA +2.95% BBVA +3.55% up 1.9%. Utilities firm Iberdrola SA ES:IBE +3.24% nudged 2.8% higher as UBS lifted the stock to buy from neutral.
“There is nothing that has fundamentally changed in Spain overnight, so this is just investors buying into a cheap market,” Nordea’s Drusebjerg said. “Spain needs reforms to get through the crisis and that’s not something that will happen overnight.”
The yield for Spain’s 10-year government bond ES:10YR_ESP +0.98% rose 6 basis points to 5.98% on Friday, according to electronic trading platform Tradeweb.
Weighing on the French index, hotel chain Accor SA FR:AC -2.29% dropped 2.7% as Morgan Stanley cut the stock to equal-weight from overweight.
French politics will also be on investors’ mind over the weekend as the country heads into its first rounds of presidential elections. Polls predict a tight race between Nicolas Sarkozy and Socialist challenger François Hollande, who has vowed to renegotiate the recently signed fiscal compact in Europe. French election stirs fears of euro-zone turmoil
“It can definitely move stock prices. There’s a continued focus in Europe that politicians move in the same direction without hesitation,” Drusebjerg said. “There’s a concern that France won’t complete as many and strong reforms as hoped if Hollande wins and that contradicts with creating a stronger and more competitive Europe.”
Among heavyweight decliners in Europe, Novo Nordisk AS DK:NOVOB -0.41% dropped 1.1%. A consumer advocacy group, Public Citizen, late Thursday asked the U.S. Food and Drug administration to remove the drug makers diabetes drug Victoza from the market because of safety concerns.
PostNL NV NL:PNL -5.93% dropped 6% after a surprise exit of Chief Executive Harry Koorstra with immediate effect.
Sara Sjolin is a MarketWatch reporter, based in London.
