Shares gain in Milan following Italian Treasury’s debt auction
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets made mixed moves after the European Central Bank and the Bank of England left interest rates unchanged Thursday, although better-than-expected data on China’s exports provided cautious support for investor sentiment.
The Stoxx Europe 600 index XX:SXXP -0.13% rose 0.1% to 288.43, after closing at its highest level since February 2011 on Wednesday.
Douglas Roberts, senior international economist at Standard Life Investments, said there were lots of positive things for markets to focus on at the moment, especially as tail risks have been reduced after the ECB introduced its Outright Monetary Transactions program.
“We’re seeing increased efforts to reform the labor market in France, Italy and Spain and some of these measures are having an impact already,” he said.
“But the trouble for Europe is that it never seems to be far away from a political crisis. I think the better macro background should be supportive, but there could be political humps on the way,” he added.
Among notable movers in Europe. Nokia Corp. shares FI:NOK1V +10.33% NOK +18.93% surged 10%, after the handset maker released preliminary fourth quarter results. It highlighted that its Devices & Services unit ”exceeded expectations” as the Mobile Phones unit and Lumia smartphones performed better-than-expected. See: Nokia shares surge after upbeat fourth quarter
Shares of MAN SE DE:MAN -2.34% jumped 3.4% in Frankfurt trading. Late Wednesday, Volkswagen AG DE:VOW3 +1.52% said it will seek a domination agreement with the German truck maker and offer to buy out the rest of the company’s shareholders.
Shares of Volkswagen moved 1.7% higher.
On a more downbeat note, shares of Marks & Spencer Group PLC UK:MKS -1.21% slumped 1.1% in London. Investors reacted to the fashion and food retailer’s report late Wednesday that comparable sales dropped 1.8% for the 13 weeks to Dec. 29. See: Marks & Spencer reports 1.8% drop in sales
More broadly, investors took heart from Chinese export data that surprised to the upside. December exports surged 14.1% from the final month of 2011, up from a 2.9% gain in November. Imports also recovered, up 6%. See: China’s exports surge, boosting trade surplus
Asia markets were mostly higher. See: Asia stocks get a lift from China trade data
Most European indexes, however, traded in tight ranges as investors focused on the two central banks’ latest monetary decisions.
The Bank of England made no changes to its asset-purchase program and left its key lending rate at a record low 0.5%, as had been widely anticipated.
Meanwhile, the European Central Bank stood pat, keeping its interest rate at 0.75% as was expected. ECB President Mario Draghi said at the following news conference that the decision to leave rates untouched was unanimous, while also stressing that risks to the economic outlook remain weighed to the downside. He did say, however, that the central bank expects a gradual recovery in 2013. See: Draghi: ECB expects 'gradual' recovery in 2013
Spain was also in the Thursday spotlight after the Treasury reportedly sold more public debt than targeted and at lower interest rates compared to previous auctions. See: Feeding frenzy: 10-year Spain bond yield below 5%
The yield on 10-year Spanish government bonds ES:10YR_ESP -4.40% fell in the secondary market to 4.89%, the lowest level in about 10 months, according to electronic trading platform Tradeweb.
On the equities side, Madrid’s IBEX 35 index XX:IBEX +0.37% rose 0.4% to 8,637.30.
And in Italy, the Treasury experienced high demand at its debt auction, selling 8.5 billion euros ($11.1 billion) in 12-month bills at yields lower than at previous auctions.
Ten-year IT:10YR_ITA -2.91% yields dropped to 4.14%.
In Milan, the FTSE MIB index XX:FTSEMIB +0.97% rallied 1.1% to 17,522.01.
Bank shares stay strong
Among notable movers in Europe, shares of Royal Philips Electronics NV NL:PHIA +3.09% added 3.1%, after Bank of America Merrill Lynch lifted its rating on the firm to buy from neutral, according to Dow Jones Newswires.
In the same vein, shares of Alstom SA FR:ALO +3.72% gained 3.8%, as Citigroup upgraded the industrial group to a buy rating from neutral previously.
France’s CAC 40 index FR:PX1 -0.24% traded 0.1% higher at 3,719.37. Shares of GDF Suez SA FR:GSZ -1.77% added pressure, off 1.8% after J.P. Morgan Cazenove downgraded the gas distributor to underweight from neutral.
Shares of Tesco UK:TSCO +2.53% TESO +1.36% also climbed, up 2.6%, after the company reported that total sales for the six weeks to Jan. 5 rose 3.8%. Tesco also said Chris Bush will take full charge of U.K. operations. See: Tesco names new U.K. head as sales return to growth
The FTSE 100 index UK:UKX +0.16% gained 0.2% to 6,113.12.
And in Germany, shares of RWE AG DE:RWE -1.10% gave up 1.5%, after Barclays downgraded the utility firm to underweight from equal weight.
The DAX 30 index DX:DAX +0.12% , however, picked up 0.5% to 7,761.77, with shares of Deutsche Bank AG DE:DBK +2.40% DB +3.49% moving 2.3% higher.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
