Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

MARKET COMMENT: Europe Stocks Jump after German Ifo Data

02/22/2013 | 12:50pm US/Eastern

By Sara Sjolin

LONDON (MarketWatch)--Europe's benchmark stock index posted its first weekly gain in four weeks Friday, as a surprisingly upbeat reading on Germany's business climate fueled investors' risk appetite, with Italian elections over the weekend also in the limelight.

The Stoxx Europe 600 index rallied 1.3% to close at 288.57, climbing back after a 1.5% drop Thursday.

The index nudged out a 0.4% weekly gain, following a week of sharp swings as investors worried about the outcome of the Italian election Sunday and Monday. Global financial markets have moved broadly higher this year, blessed with a strong risk-on sentiment as signs of economic recovery lift investors' spirits. However, mixed European data and worries over the U.S. Federal Reserve monetary-easing program sent markets wobbling this week.

"I think investors have been slightly unclear about what direction to take ahead of the Italian election this weekend. There's a lot of uncertainty," said Guy Foster, head of portfolio strategy at Brewin Dolphin.

"Yesterday, you had the minutes from the Fed and investors are always desperate for signs about what will happen to quantitative easing. They are looking for a ghost that is not really there. The minutes didn't really suggest anything new, but it just happened in addition to no other good news that day," he added. "Investors are thinking this is a good opportunity and are taking advantage of the little window that has opened."

Among notable movers in the pan-European index, shares of Elan Corporation PLC rose 4.2%. The biotech firm said it would buy back $1 billion of its own shares, using money from the sale of its multiple-sclerosis drug Tysabri.

Pointing in the other direction, shares of Air France-KLM dropped 6.7%, after the airline said its loss widened in 2012 compared to 2011.

Shares of Finmeccanica SpA slumped 4.1%, after the defense group said it would delay publishing its full-year results amid a bribery probe into a sale of helicopters to Indian authorities.

For the broader European stock market, upbeat data out of Germany helped lift the trading mood. The Ifo Business Climate index jumped to 107.4 in February, exceeding expectations of a 104.7 reading.

On a more downbeat note, the European Commission said the euro-zone economy will shrink for the second year in a row, as a return to growth appears to be more gradual than expected.

Investors also trained their attention on general elections in Italy over the weekend, with worries a new government including former Prime Minister Silvio Berlusconi will fail to follow up on the country's current reformist drive. Several parties including Berlusconi's have openly campaigned against the austerity measures the nation had to implement in order to meet its EU commitments.

"The market is currently pricing in a rather constructive election outcome, in our view. However, we still see a realistic risk either of a hung parliament, or a potentially difficult and protracted negotiation process as [center-left candidate Pier Luigi] Bersani and [Prime Minister Mario] Monti seek to form a coalition," analysts at RBC Capital Markets said in a note.

"That leaves us remaining cautious about peripheral exposure in outright terms and in [yield spreads between Italian government bonds and German bunds] in the near term," they said.

Polls aren't allowed in the final weeks leading up to the election in Italy, but polls published before the cutoff date put a center-left coalition led by Bersani in the lead.

Italy's FTSE MIB index posted a 1.6% weekly loss, but was up 1.4% to 16,233.28 on Friday.

Among other country-specific indexes, France's CAC 40 index added 2.3% to 3,706.28 and rose 1.3% on the week. Banks were on the rise, with shares of Societe Generale SA up 1.8% and BNP Paribas SA 2.7% higher.

Shares of Alcatel-Lucent slipped 1.8% after the telecom-equipment maker appointed Michel Combes, former head of Vodafone Group PLC's European operations, as new chief executive. Additionally, HSBC lifted the stock to neutral from underweight.

In Germany, Deutsche Bank AG climbed 1.9%. The DAX 30 index moved 1% higher to 7,661.91 and closed out the week 0.9% higher

Volkswagen AG slid 7%, as the car maker said it sees flat operating profit in 2013 amid intense competition and an uncertain economic environment.

And in the U.K., J Sainsbury PLC gained 2.1%, after Citigroup lifted the supermarket retailer to buy from neutral.

The FTSE 100 put on 0.7% to 6,335.70 and added 0.1% on the week.

Write to Sara Sjolin at AskNewswires@dowjones.com

React to this article
Latest news
Date Title
03:19p RENTRAK : Announces Official Worldwide Box Office Results for Weekend of March 29, 2015
03:18p AT&T : service restored in some areas
03:17p HYUNDAI HCN : USC film student remains critical, train operator at home following Metro crash
03:15pDJHome' Sweeps Away Box Office
03:07p INTEL : AFA cadets working on system to stop computers viruses before they infect
02:59p DP WORLD : Dubai gov t sets up firm to develop ports around world
02:47p BEST BUY : Tractor Supply latest business to build on FM 365
02:42p ADA : UF Health Cancer Center gets state award
02:37p ROCKY BRANDS : Federal Contracts Awarded to Companies in Ohio (March 29)
02:37p PHILIPS : Federal Contracts Awarded by Federal Agencies in Pennsylvania (March 29)
Latest news
Advertisement
Hot News 
JUDGES SCIENTIFIC : Profit Up But Like-For-Like Revenue Shrinks
MELROSE BANCORP : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)
OHR PHARMACEUTICAL : Announces Final Topline Data From OHR-102 Phase II IMPACT Study in Wet-AMD
ANDREWS SYKES : Temporary arena in London requires replacement heating
RBC BEARINGS : Nasdaq stocks posting largest percentage increases
Most Read News
03/28 OGE ENERGY : BRIEF: More than 3,000 without power in NW Oklahoma City
03/28 F SECURE : Hypponen Reviews the State of the Internet
03/28 A BROWN : Voter's guide
03/28 ST JUDE MEDICAL : . Jude launches trial of heart valve for children
03/28 PG&E6CPREF : PG&E helps Salvation Army with mobile vehicle
Most recommended articles
03:15pDJHome' Sweeps Away Box Office
02:07p Stocks likely to drift as investors await Fed, earnings
01:50p Euro Relief Rally May Hit Wall as Market Refocuses on EZ CPI, US NFPs
01:16p ABN Amro IPO back in sight after executives concede on pay
01:14p ABN Amro IPO back in sight after executives concede on pay
Dynamic quotes  
ON
| OFF