By Sara Sjolin and Barbara Kollmeyer, MarketWatch
LONDON (MarketWatch) -- European stock markets pushed into the
black in the last hour of trading on Wednesday, as investors
brushed aside a mixed bag of U.K. labor data and downbeat U.S.
housing starts.
The Stoxx Europe 600 index pared earlier losses and rose 0.1% to
close at 334.94 after closing almost flat on Tuesday.
Carlsberg AS jumped 7.1% after the brewer said strong growth in
Asia helped offset weakness in its Russian and Western European
markets in 2013.
Swedish drug maker Meda AB surged 11% after posting a lower
profit but higher sales in the fourth quarter.
Credit Agricole SA rose 2% in Paris after the bank said it swung
back to a profit in the fourth quarter.
Tenaris SA fell 6.9%, the top decliner for the Stoxx 600 while,
Vallourec SA lost 4.5%. Last summer, the two companies reportedly
complained to the U.S. that manufacturers of steel pipes in South
Korea, India and other countries were selling too cheaply in the
U.S. A preliminary U.S. Commerce decision found no dumping of
imports by South Korean companies, Reuters reported.
Among other notable movers in the benchmark, shares of OMV AG
dropped 2.1% after Austria's biggest oil-and-gas company said
production outages in Libya pushed net income lower in 2013.
Shares of ITV PLC dropped 1.4% in London after the commercial
broadcaster said it has acquired a controlling stake in DiGa
Vision, a New York-based independent producer of reality and
scripted programming.
More broadly, U.S. housing-starts data dived 16% in January, a
much sharper fall than expected as unusually cold weather in
January impacted demand. After the European markets close, minutes
from the Federal Reserve's latest meeting are also due. U.S. stocks
opened mixed.
In Europe, data showed U.K. unemployment unexpectedly rose to
7.2% in the three months to December. Analysts expected the rate to
remain at November's 7.1% or drop to 7%. Meanwhile, other data sets
showed earnings growth strengthened and jobless claims declined,
indicating the U.K. labor market continues to improve.
The job situation has been a major focus point in the U.K. after
the Bank of England in August said it would discuss raising rates
when the unemployment level dropped to a threshold of 7%. However,
after a faster-than-expected drop in the jobless rate, the BOE last
week revamped its forward guidance and said it will now consider a
broader range of economic indicators and focus on reducing spare
capacity before hiking interest rates.
Analysts said the drop in the headline unemployment rate
shouldn't be a major concern, although it eases pressure on the BOE
to raise rates.
Minutes from the central bank's February policy-setting meeting
were also out Wednesday morning and showed the committee members
voted unanimously to keep rates low and make no changes to the
bond-buying program.
The FTSE 100 index closed flat at 6,796.71.
Germany's DAX 30 index pared a sharper earlier loss and also
ended flat at 9,660.05 and France's CAC 40 index rose 0.2% to
4,341.10, helped by Crédit Agricole.
A Bank of America Merrill Lynch fund manager survey out Tuesday
showed the euro zone as the favorite region among investors for a
sixth-straight month, but John Bilton, the bank's European
investment strategist, cautioned that valuations are already "fully
price in the region's growth outlook."
But Peter Garnry, head of equity strategy of Saxo Bank, said
Wednesday that he thinks this will be the year Europe stocks
outperform the U.S., because of the "potential for tailwind and
multiple expansion."
Europe stocks are also coming from a lower base, as equity
indexes on average haven't gone back to previous peaks as they have
in the U.S., he said.
"In the U.S., any increase from here will be driven by earnings
gains and because of profit margins operating so high it has to be
ultimately driven by revenue," said Garnry. "So far, that's looking
OK with fourth-quarter earnings season in the U.S., but figures are
not good enough to be better than multiple expansion in
Europe."
Garnry is watching cyclicals, financials, industrials and
materials sectors, but also added that his view is dependent on a
growth recovery for Europe's economies.
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