By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Uncertainty over the timing of a potential Spanish bailout left European stock markets wobbly on Wednesday, with banks pushing higher, but oil firms and drug makers on the decline.
The Stoxx Europe 600 index XX:SXXP -0.11% fell 0.1% to 271.42, but seesawed between small gains and losses.
“We had a good rally over the course of the last four weeks. People take time out now to think about where we go from here in terms of growth and the euro-zone crisis,” said Peter Dixon, strategist at Commerzbank.
“With earnings season about to get underway, we’ll certainly see that numbers won’t be strong, given what ‘s happening in the economy. The real question for markets is to what extent the expectations differ from the outlook,” he said.
Among notable movers, FirstGroup PLC UK:FGP -18.08% sank 19%, after the Department of Transportation canceled the competition for the InterCity West Coast franchise, for which FirstGroup had submitted a bid.
Fortum Oyj FI:FUM1V -1.74% fell 1.9% after HSBC cut the Finnish utility firm to underweight from overweight.
Elsewhere, worries that a bailout for Spain will happen later rather than sooner dented sentiment.
Reports in recent days signaled that an official request for aid could come as soon as this weekend, but Spanish Prime Minister Mariano Rajoy reportedly said late Tuesday that he has no plans to ask for a bailout this week. An official bailout request is required to trigger the European Central Bank’s unlimited bond-buying program aimed at easing pressure on sovereign borrowing cost.
“We think this disappointment will slowly build over the month, but that any selloff is likely to [be] capped by the backstop facility in place,” said analysts at Deutsche Bank in a note.
“On one side of the battle line is the market, which has driven yields [lower] substantially since the aid became available on the assumption it will be taken. On the other side is Spain, which is benefiting from the knowledge that this aid is there but would prefer not to take it,” they said.
Spain’s IBEX 35 index XX:IBEX -0.44% dropped 0.3% to 7,844.60.
Data for the broader euro zone painted a bleak picture of the economy in the region as the final composite purchasing managers’ index for September fell to a fourth-month low. See: Euro-zone PMI points to 'inevitable' recession
In China, consumer sentiment slipped for a third straight month, while official non-manufacturing Purchasing Managers’ Index for September printed its weakest reading since November 2010. See: China consumer sentiment slips in September and See: China's services sector PMI cools in September
U.K. and France
In the U.K., Xstrata PLC UK:XTA +0.74% rose 0.8% and Glencore International PLC UK:GLEN +0.83% gained 0.9%, as the European Commission said it will decide whether to clear the proposed merger between the two companies by November 8. See: EU To decide on Glencore-Xstrata merger by Nov 8
Tesco PLC UK:TSCO -1.34% tripped 1.2%, after it posted a drop in first-half profit, dragged down by sluggish sales and a turnaround plan. See: Tesco profit drops as U.K. sales fall
The FTSE 100 index UK:UKX +0.10% inched 0.1% higher to 5,816.14, with heavyweight HSBC Holdings PLC UK:HSBA +1.26% HBC -0.55% HK:5 -0.55% up 1.2%.
In France, Alstom SA FR:ALO +0.63% rose 0.6%. The industrial conglomerate signed a contract for the maintenance, overhaul and modernization of 27 passenger locomotives over 25 years in Kazakhstan. See: Alstom gets 25-year railway contract in Kazakhstan
Sanofi SA FR:SAN -0.76% SNY +0.11% fell 0.5%. The drug maker said it has agreed to buy Colombian generic drug manufacturer Genfar SA.
Separately, the French firm and Bristol-Myers Squibb Co. BMY +0.12% said they are changing their agreement for top-selling Plavix and Avapro/Avalide. See: Sanofi, Bristol-Myers revamp Plavix, Avapro deal
The CAC 40 index FR:PX1 -0.22% tripped 0.1% to 3,410.78.
Among German stocks, Deutsche Bank rose 2.4%. The DAX 30 index DX:DAX +0.07% added 0.3% to 7,327.82.
Sara Sjolin is a MarketWatch reporter, based in London.
