MW: Europe stocks fall; BNP wavers on settlement report
Euro-zone inflation steady in June
By Carla Mozee, MarketWatch
LONDON (MarketWatch) — European stocks slipped Monday following a slower-than-expected pace of inflation in the euro zone, while shares of BNP Paribas SA seesawed ahead of an expected multibillion dollar settlement with U.S. authorities.
The Stoxx Europe 600 XX:SXXP -0.08% was down less than 1 point at 342.82, and had lost as much as 0.3% in the wake of a Eurostat report that inflation remained stable at 0.5% in June from the same level in May. The reading missed forecasts of 0.6%.
The European Central Bank recently launched measures aimed at boosting inflation levels in the euro-zone area.
RBC Capital Markets said it was “hard to conceive” the June inflation data “as being anything other than (at very best) neutral, to slightly negative, for policy.” The next monetary policy statement from the ECB will arrive on Thursday. Its staff has projected inflation in the euro zone reaching 0.7% in 2014.
“[B]arring any dramatic divergence from the ECB’s baseline outlook, we think the Governing Council is on the sidelines for the next few months until such time as it is possible to form some kind of tentative judgments on the effects of the most recent package of measures,” said RBC Capital’s chief European economist James Ashley in a report.
The preliminary June data showed the weak inflation level largely was due to food, alcohol and tobacco prices, which fell 0.2% in June.
The euro EURUSD +0.11% bought $1.3655 before and after the inflation data. It fetched $1.3630 late Friday.
Investor focus is on BNP Paribas SA FR:BNP -0.22% , ahead of an expected announcement from the U.S. Justice Department that the French bank will pay nearly $9 billion in a settlement for allegedly engaging in transactions with sanctioned countries. BNP shares were up less than 1 point in Paris trading after rising by as much as 1% intraday.
The France’s CAC 40 equity index FR:PX1 -0.28% reversed course and fell 0.1% to 4,432.80.
But shares of Dutch electronics group Philips NV PHG +3.02% NL:PHIA +3.33% rose 3.5%, bouncing higher after saying it plans to create a standalone company by combining its LED-lighting and automotive-lighting businesses. Sales of the combined businesses were around 1.4 billion euros ($1.9 billion) in 2013, or about 17% of Philips’s total lighting sales.
Elsewhere in the lighting industry, Germany’s Osram Licht AG XE:OSR +5.38% climbed 5.5%, topping the Stoxx 600 index. The move follows a ratings upgrade to neutral from overweight at J.P. Morgan Cazenove after a correction in Osram’s shares below the broker’s December 2014 target price of €35. “Additional restructuring measures and increased transparency could result in some support for the stock in the coming six months,” wrote analyst Andreas Willi.
Shares of Vestas Wind Systems DK:VWS +4.87% were up 5.1% after the Danish company won an order for 225 wind turbines from EDF Renewable Energy for two projects in the U.S. Delivery is expected to take place next year.
Among country indexes, the U.K.’s FTSE 100 UK:UKX -0.20% turned lower by 0.2%, while Germany’s DAX DX:DAX +0.20% picked up 0.2%.
The Stoxx 600 last week fell 1.8%, the biggest weekly pullback since mid-April, according to FactSet data. It was on track for monthly decline of 0.7%, but a gain of 2.2% for the second quarter.
