MADRID (MarketWatch) -- For a second consecutive day, stocks in Europe struggled to make significant ground, wavering between gains for the mining sector, banks and automakers like Volkswagen and losses for utilities and telecoms.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) fell 0.1% to 178.58, while the French CAC 40 (FR:1804546: news , chart , profile ) slipped 0.1% to 2,892.06 and the German DAX 30 (DX:1876534: news , chart , profile ) rose 0.4% to 4,240.66.
The U.K. FTSE 100 (UK:UKX: news , chart , profile ) fell 0.1% to 3,897.30.
Also in markets, the U.K. Treasury successfully auctioned 1.1 billion pounds worth of index-linked gilts, a day after an auction of 40-year conventional gilts fell short of buyers.
A late surge for U.S. stocks on Wednesday, as well as gains for U.S. stock futures on Thursday, helped to put a floor on losses.
Markus Wallner, European equity strategist with Commerzbank, said Europe stocks continue to stumble over worries surrounding banks.
"The solution of the banking crisis in the U.S. is nice for U.S. banks, but it doesn't stop problems for the European banks," he said.
Wallner said Europe banks also have problems with toxic paper, and as the U.S. is coming up with solutions, Europe needs a fix as well. "They need to make here the same plan or another solution," he said.
At the same time, Europe markets are holding back because many investors want to see whether the new plans announced by U.S. Treasury Secretary Timothy Geithner to help remove toxic assets from banks' balance sheets will work, he said.
Banks were broadly higher with Barclays up over 6% and Lloyds Banking Group up 5.6%.
However, shares of Allied Irish Banks fell 9% after the Serious Fraud Office in Britain said it was investigating an alleged fraud in the bank's corporate banking department.
Also in financials, U.K. hedge fund manager Man Group (UK:EMG: news , chart , profile ) soared 11% after the firm maintained its dividend payout and launched a new investment management business, though it said profit will likely fall 43% in the year ending March 31. See full story.
Utilities on the wane, miners, autos higher
European utilities were on the decline, with Spanish renewable energy group Iberdrola Renovables SA (ES:IBR: news , chart , profile ) down more than 2% and Endesa SA (ES:ELE: news , chart , profile ) slipping 2.6%.
Wallner said investors especially in Europe have been intensively rotating between cyclicals and defensives.
"They play three days cyclicals and lock in gains and the go back in defensives for three days again, then the rotation begins again. They're very cautious...most of the investors don't trust the increase in index prices."
The cyclical mining sector advanced. Eurasian Natural Resources (UK:ENRC: news , chart , profile ) jumped 8.3%, while Kazakhmys (UK:KAZ: news , chart , profile ) rose 7.2% and Rio Tinto (UK:RIO: news , chart , profile ) (RTP:
128.49, -1.51, -1.2%) , which got the sell nod from Royal Bank of Scotland on Wednesday, rose 6%.
Market heavyweight Volkswagen (VLKAY:
63.10, +4.30, +7.3%) (DE:VOW: news , chart , profile ) jumped 13%, following on from gains seen in the prior session after Porsche Automobil Holdings SE (DE:PAH003: news , chart , profile ) inked a deal on a credit line of 10 billion euros, which it's expected to use to increase its stake in VW.
Shares of Porsche were up over 3%. See full story
Shares of Italian automaker Fiat SpA (IT:F: news , chart , profile ) rose 5.2%. The U.S. government is encouraging talks on an alliance between Chrysler and Fiat to continue, according to a report in The Wall Street Journal. See story.
Retailers were also in the spotlight. Shares of Sweden's Hennes & Mauritz fell 5.6% and U.K. retailer Next (UK:NXT: news , chart , profile ) fell 1.6% after both reported lower profits as consumers spent less on fashion in the recession and the stronger dollar eroded margins. See full story.
Northern Foods (UK:NFDS: news , chart , profile ) shares rose 8%. Helped by customers buying more supermarket-label food that Northern Foods produces, as well as launches of its own value ranges, fourth quarter to March 28 comparable sales climbed 8.8%.
