MW: Banks lead Europe stocks higher; cliff in focus
By Sara Sjolin, MarketWatch
LONDON (MarketWatch)—European stock markets struggled for direction on Tuesday, as investors kept an eye on continuing budget wrangling between Democrats and Republicans in the U.S., which seemed to have come to a deadlock.
The Stoxx Europe 600 index XX:SXXP +0.11% inched 0.1% higher to 276.26.
“It’s pretty quiet today with volumes on the lower end, but we have seen some risk being added given the small dip in markets over the few days into December,” said Atif Latif, director of trading at Guardian Stockbrokers, in emailed comments.
“Given historical market action in December and the expectations that a last minute deal on the fiscal cliff will materialize we see upside risk on the market just now,” Latif said.
“Longer-term risk remains and we think that the market will weaken after this next push up, which will be an opportune time to take profits and position defensively and with negative bias,” he said.
Among major movers in the Stoxx 600, shares of Elekta AB SE:EKTAB +5.90% jumped 5.7%, after the medical-technology firm reported a 22% rise in second-quarter sales.
Shares of TUI Travel PLC UK:TT +3.12% added 3.3%. The travel company reported a 40% increase in pretax profit for the year ended Sept. 30. See: TUI Travel profit rises, sees encouraging trading
Southern European banks were also on the rise, with shares of Banca Monte dei Paschi di Siena SpA IT:BMPS +6.91% up 5.5% and UniCredit SpA IT:UCG +2.62% rising 2.5%.
Financial markets stabilized on Monday, after Greece said it would buy back as much as 10 billion euro ($13.1 billion) in debt owed to private creditors in an effort to bring its debt pile to a sustainable level.
Bucking the positive trend, shares of Tullow Oil PLC UK:TLW -6.35% tanked 6.6%, after the oil explorer said its Zaedyus-2 appraisal well didn't find commercial hydrocarbons.
Stalemate in U.S. budget negotiations
Elsewhere, the U.S. budget negotiations weighed on sentiment, as the White House and congressional Republicans made little progress in reaching a deal before a raft of automatic tax hikes and spending cuts will take effect in the new year—an event known as the fiscal cliff.
House Republicans on Monday offered a plan that would raise $800 billion in new revenue from taxes, which is about half of what President Barack Obama previously proposed. The White House dismissed the plan, saying it represented nothing new. See: Republicans offer tax revenue in cliff plan
U.S. stock opened mixed on Wall Street. See: Stock futures inch up amid cliff wranglings
“Perhaps the silver lining to all this is that the dialogue continues between both parties, although it seems the existing positions on tax rates and entitlements remain entrenched,” analysts at Deutsche Bank said in a note.
Separately, Deutsche Bank analysts in a different note said they see 2.5% growth in the U.S. economy in 2013, helping stage a rebound in global growth for the full year.
