By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stock markets fell Tuesday, giving back nearly all of the gains earned in the prior session, with banks and reinsurers leading the downside. Fresenius Medical Care AG & Co. KgaA was among the day’s worst decliners.
The Stoxx Europe 600 index XX:SXXP -0.34% fell 0.3% to 287.52, following a gain of more than 1% in the prior session, after upbeat economic data in Europe and the U.S.
Fresenius DE:FME -8.31% tumbled 8% after the U.S. Department of Health and Human Services said it could cut payments to kidney-dialysis centers from 2013 forward. Fresenius operates a large network of dialysis clinics throughout the U.S.
Analysts said traders were growing cautious ahead of central bank meetings in the U.K. and Europe on Thursday, along with all-important U.S. payrolls data later this week. Wall Street stocks opened with losses.
Broker moves were accounting for some of the drop in stocks Tuesday. Utility company RWE DE:RWE -4.09% shares fell 3.6% to 22.42 euros after Morgan Stanley cut shares to equal-weight from overweight and cut its price target to €28 from €36 a share. Analyst Bobby Chada cited a tough operating environment and higher-than-expected leverage, and said there is little scope for a power-price rebound.
Insurers were also in a negative spotlight. J.P. Morgan Cazenove said it expects a 10% decline in natural catastrophe reinsurance and sees flat rates on other reinsurer lines, and reduced its 2014 earnings-per-share estimates for key reinsurers. In light of this, Hannover Re SE DE:HNR1 -4.15% was cut to underweight from neutral, leaving shares nearly 3.5% lower. Shares of Munich Re DE:MUV2 -2.98% fell 2.7% as it was dropped to neutral from overweight. Swiss Re AG CH:SREN -2.13% dropped 2.3% after being cut to neutral from overweight.
The German DAX 30 index DX:DAX -0.73% was among the leading decliners among regional European indexes, down 1.2% to 7,888.75, dragged by Munich Re and Fresenius. Siemens AG DE:SIE -1.03% SI -1.07% fell 1.2%, reversing a chunk of Monday’s gains that came from news it’s buying Nokia Corp.’s NOK +0.65% FI:NOK1V +1.15% stake in telecom equipment venture Nokia Siemens Networks. Pharmaceutical group Bayer AG DE:BAYN -0.34% lost 1%.
On the upside, shares of Burberry Group PLC UK:BRBY +3.37% rose 3.3% to 1,410 pence after HSBC lifted the luxury retailer to overweight from neutral, and its price target to 1,750 pence from 1,530 pence.
The FTSE 100 index UK:UKX -0.08% was still under water, down 0.45 to 6,282.53. Financials were also lower across the board in Europe, with Barcays PLC UK:BARC -0.51% BCS -0.35% stumbling 1.3% and Lloyds Banking Group UK:LLOY -1.20% LYG -1.67% falling 1.4%.
Shares of Michelin FR:ML +2.10% added 1.5% after UBS upgraded shares to buy from neutral, saying the tire company is only part of the way toward improving its cost positions significantly. Analyst Philippe Houchois also said its more-aggressive pricing on light-vehicle tires is positive.
Those gains weren’t enough to support the French CAC 40 index FR:PX1 -0.58% , which fell 0.7% to 3,741.90. Again in the drug sector, shares of Sanofi SA FR:SAN -1.38% SNY -0.76% fell 1.3%, which dragged the index south. Societe Generale SA FR:GLE -1.39% joined banks in the red with a 1.8% drop.
In other markets, Portugal’s PSI 20 index PT:PSI20 -0.76% fell 0.9% to 5,563.16 as bond yields also rose in the country a day after the country’s finance minister, Vitor Gaspar, resigned. Gaspar was a key enforcer of austerity measures. Banco Espirito Santo SA PT:BES -1.41% fell 2%.
Greek stocks outstripped Germany with losses. The Athens Composite Index GR:GD -3.03% fell 2.2% to 832.48, after Reuters reported that the international “Troika” of lenders has given the country a three-day ultimatum over its bailout. Greece is facing a risk that its much-needed €8.1 billion bailout ($10.59 billion) could be delivered in three monthly payments rather than a lump sum. In Athens, the Hellenic Telecommunications Organization SA GR:HTO -4.28% fell 2.6%.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.
