MW: Europe seeks direction as oils perk up, industrials weigh
European stock markets meandered on both sides of the flat line on Wednesday, with gains from oil and drug stocks, while downgrades for some mining stocks and losses for German industrial conglomerate Siemens tugged in the other direction.
The pan-European Dow Jones Stoxx 600 index fell 0.01% to 178.05, while the French CAC 40 crept up 0.1% to 2,876.38, and the German DAX 30 rose 0.01% to 4,186.17.
The U.K. FTSE 100 fell 0.3% to 3,896.33.
Europe markets were getting little spirit from U.S. markets, which closed weaker on Tuesday as the financial sector gave back some gains. Analysts said profit-taking was to be expected after recent sharp rallies.
Markets appeared to be bucking a weak survey on business sentiment from Germany. The Ifo business climate index slipped to 82.1 in March from 82.6 in February. See full story.
"Another sharp drop in the assessment of current business conditions offset the modest pick up in expectations. The improvement in the latter will encourage hopes of a rebound in overall sentiment going forward, which seems likely given the recent run of improvement in other survey data," said Ken Wattret, chief euro-zone economist at BNP Paribas, in a note to investors.
"Still, the manufacturing and export-geared economies like Germany and Japan are being hit exceptionally hard by the global slowdown."
Sectors trading in the black overtook those in the red, with oil, pharmaceutical, telecoms and banks higher.
Shares of U.K.'s Premier Oil jumped 13% after it agreed to buy the North Sea unit of Canada's Oilexo Inc. for $505 million to be partly funded by a rights issue of new shares to raise 171 million pounds and new agreed credit facilities.
"Premier has cash on its balance sheet but has been lacking major exploration momentum...it's a very smart move - the strong picking off the weak," Richard Griffith, analyst at Evo Securities.
Other gainers in the energy sector were shares of U.K-based Dana Petroleum , up more than 5% and Spain's Repsol YPF SA , which tacked on 2.3%.
Weighing on the downside was German conglomerate Siemens . Shares tumbled more than 4% after its chief executive officer Peter Loescher reportedly said the company is no longer "immune" to the effects of the global economic crisis in an interview in Handelsblatt newspaper.
The environment has become "significantly worse" since January, Loescher is cited as saying.
Miners were also weak, hit by downgrades, with Anglo American stumbling 3.7% and Rio Tinto tripping 1.4% after both were cut to sell from hold by Royal Bank of Scotland.
On Rio, the broker said the group still faces significant risks on 2009 earnings and the company's $19.5 billion funding deal with Aluminum Corp. of China, or Chinalco. However, Australia's competition bureau said Wednesday that it has no objection to Chinalco's bid for Rio Tinto's stake. See related Rio Tinto story.
Also on the wane, U.K. medical and security equipment group Smiths Group tumbled nearly 9% after the group said its first-half net profit fell 23% to 108.6 million pounds. See London Markets story.
Shares of Inditex SA jumped over 5% as the Spanish retailer reported 2008 net income at 1.25 billion euros ($1.68 billion) in 2008, unchanged from 2007, which was close to market expectations. See full story.
U.K. supermarket operator J Sainsbury said Wednesday that comparable sales excluding fuel rose 6.2% in the fourth quarter, but that it expects the economic environment to remain challenging.
Shares fell 2.5% in London.
Legal & General said Wednesday that it swung to a 2008 net loss and is recommending a 50% cut in the final dividend to 2.05 pence a share. Shares fell 3% in London. See full story.
Auto stocks were also in focus as Porsche Automobil Holdings said it's finalized negotiations for a fresh 10 billion euro ($13 billion) credit line, that can be extended to as much as 12.5 billion euros in coming weeks. Shares were up just under 1%.
Shares of Peugeot dropped 1.9% after UBS cut the French automaker to sell from neutral by UBS, with the broker saying the firm's debt is increasing, and with few assets to sell, it may need to increase capital and/or do a debt-for-equity swap.
