MW: Europe stocks gain with U.S. earnings in focus
Athens benchmark on the rise; higher Vodafone underpins London
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets rose Tuesday, as investors focused on the unofficial start to the U.S. earnings season and discounted euro-zone data that painted a mixed picture of the region’s economic recovery.
The Stoxx Europe 600 index XX:SXXP +0.15% traded 0.1% higher at 286.97, erasing some of the benchmark’s 0.4% loss on Monday.
“U.S. earnings are what everybody is focusing on this week,” said Guy Foster, head of portfolio strategy at Brewin Dolphin.
“Whilst people had fairly modest expectations for the earnings season, they are now looking more optimistic. Surveys have been better, payrolls have been better and the housing market has improved. There are various factors that support risk premiums,” he said.
Among Tuesday’s movers, shares of Vodafone Group PLC UK:VOD +1.96% VOD -1.62% gained 1.9%. Lowell McAdam, chief executive of Verizon Communications Inc. VZ -1.31% , said it is possible the U.S. blue-chip could buy out Vodafone’s 45% stake in joint venture Verizon Wireless. See: Verizon CEO says buying out Vodafone is feasible
Nokia Corp. FI:NOK1V -5.67% NOK -3.79% sank 5.4%, as Credit Suisse reiterated its underperform rating on the handset firm and said it “faces material challenges in turning the business around over the next 12 months.” It specifically mentioned that Nokia’s Windows phones will struggle to gain traction, as the firm’s hardware is less competitive compared to Apple’s AAPL +0.58% iPhone 5 and Samsung’s Galaxy.
Shares of Telekom Austria AG AT:TKA -3.81% lost 3.8%. The carrier said it expects the “challenges which characterized the operational environment during 2012 to continue to dominate” in 2013.
Alcoa on deck
Investors are jittery as they wait for U.S. corporate-earnings releases. A bellwether for global growth, Alcoa Inc. AA +0.66% , releases its fourth-quarter results after Tuesday’s closing bell on Wall Street.
“With a global footprint and being the first cyclical name to report, investors will be keenly watching [Alcoa] management’s guidance for forward aluminum demand as a gauge of global economic conditions,” analysts at Deutsche Bank said in a note.
Foster from Brewin Dolphin said that while earnings expectations have improved recently, investors will find it hard to only focus on potentially good news from the corporate sector.
“It has to be a pretty strong earnings season to make investors look beyond the [U.S.] debt ceiling,” he said. “If it’s not solved you could expect a technical recession based on sequestration. But we don’t expect that to happen,” he added.
U.S. policy makers last week hammered out a last-minute deal to avert the fiscal cliff, but they will soon return to the negotiating table to deal with the nation’s debt ceiling.
U.S. stocks traded lower on Wall Street.
Europe data
In Europe, a raft of macroeconomic data kept investors busy. The European Commission reported unemployment in the 17-nation euro area rose to 11.8% in November, up from 11.7% in October, hitting new a euro-era record. Meanwhile, retail sales for the region rose a less-than-expected 0.1% in November.
On a more hopeful note, economic sentiment for the euro zone rose to 87 in December, beating analysts’ expectations.
Separately, German data showed exports dropped 3.4% in November, adding to concerns that Europe’s largest economy might have slipped into contraction in the fourth quarter.
In Frankfurt, the DAX 30 index DX:DAX -0.18% fell 0.2% to 7,717.63. Shares of Munich Reinsurance Co. DE:MUV2 -1.02% gave up 1.6%, as Bank of America Merrill Lynch added the firm to its least preferred list and cut its rating to underperform from neutral.
French-listed insurer AXA SA FR:CS -1.15% also got downgraded, to underperform from neutral, sending the shares down 1%.
Greek stocks, on the other hand, rallied, after the Public Debt Management Agency said it successfully sold a total of 2.6 billion euros ($3.41 billion) in four- and 26-week Treasury bills at higher demand and lower borrowing costs than at previous auctions. The amount sold exceeded the targeted amount on offer for both sets of bills.
The ASE Composite index GR:GD +1.02% gained 1.6% to 985.34.
Among Tuesday’s other notable European movers, shares of HSBC Holdings PLC UK:HSBA -0.62% HBC -1.02% HK:5 -0.36% fell 0.6% in London. Investec Securities cut its rating on the banking heavyweight to hold from buy. However, the FTSE 100 index UK:UKX +0.09% traded 0.1% higher at 6,069.39, supported by Vodafone’s gains. See: Vodafone leads U.K. stocks narrowly higher
And in Paris, the CAC 40 index FR:PX1 +0.51% gained 0.5% to 3,723.00, with French banks on the rise.
