By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Europe's benchmark stock index snapped a
six-day winning streak on Tuesday, tracking U.S. stocks lower after
a central-bank member said a reduction in asset purchases could
come as soon as next month.
The Stoxx Europe 600 index lost 0.4% to close at 303.50,
dropping from its highest closing level since late May reached on
Monday.
The index traded close to the flat line earlier in the day, but
started moving lower around the U.S. market open.
"Obviously this week, several Fed members talk and that puts
tapering back in the firing line and the markets tend to move on
comments from Fed members," said Richard Perry, chief market
strategist at Central Markets in London.
That was also the case for markets in afternoon action on
Tuesday. Dennis Lockhart, the president of the Atlanta Fed Bank,
said in an interview with MNI that the Federal Reserve could start
tapering its bond purchases at any of the three remaining policy
meetings this year: September, October or December. Investors have
in recent months worried the central bank will soon scale back its
easing program, after Chairman Ben Bernanke said further
improvement in economic data could trigger tapering.
Mining firms, which are sensitive to changes in metals prices,
added the most pressure on Stoxx 600 as the Lockhart comments
slammed gold and other commodity prices.
"Gold is massively influenced by asset purchases and a reduction
would certainly have an impact on gold prices," Perry said. "We see
some big losses across the board for the general mining sector,
with Fresnillo and Randgold down a lot and it's pretty much metals
related."
Shares of Fresnillo PLC sank 11%, Randgold Resources Ltd. (GOLD)
dropped 5.6% and Anglo American PLC lost 4%.
Upbeat Europe data
Earlier in the day, the pan-European index traded in positive
territory after a string of upbeat macroeconomic data. German
manufacturing orders beat forecasts by a large margin in June, up
3.8%, as orders from the euro zone leapt 10% from May. See:
Goldilocks with a European accent: What strong data means for
QE
In the U.K., industrial production rose 1.1% in June and
improved 0.6% in the second quarter, with the quarterly figure the
strongest since December 2010.
Meanwhile in Italy, gross-domestic-product data showed the
county's recession eased in the second quarter, with the economy
shrinking 0.2% compared with a 0.6% contraction in the first
quarter.
The country-specific indexes, however, closed on a downbeat
note, weighed by the U.S. tapering comments.
The FTSE MIB index dropped 0.4% to 16,683.17, while the U.K.'s
FTSE 100 index lost 0.2% to 6,604.21.
Germany's DAX 30 index sank 1.2% to 8,299.73, while France's CAC
40 index fell 0.4% to 4,032.57.
Movers
Among notable movers in the indexes, shares of Salzgitter AG
slumped 12% in Frankfurt after the steelmaker late Monday cut its
profit guidance for the second time this year. J.P. Morgan Cazenove
cut the firm to neutral from overweight.
Munich Reinsurance Co. slid 5.4% after the firm said its
second-quarter results were marked by claims burdens of EUR230
million from the floods in Germany and neighboring countries.
Lanxess AG shaved off 4.3% after the chemicals firm warned its
earnings outlook for 2014 was no longer realistic after a tough
second quarter.
On a more upbeat note in Germany, TV operator Sky Deutschland AG
climbed 6.6% after it narrowed its net loss in the second quarter
and confirmed its full-year outlook.
Shares of GlaxoSmithKline PLC (GSK) dropped 0.7% in London after
Citigroup cut the drug maker to neutral from buy, saying the stock
seems fairly valued in the near term after a period of
outperforming the sector.
HSBC Holdings PLC (HBC) lost 0.8% after Deutsche Bank cut the
bank to hold from buy on the back of a disappointing earnings
result out on Monday.
Banks were also lower in France. Société Générale SA lost 2.5%
and BNP Paribas SA dropped 0.6%. Shares of Crédit Agricole erased
0.9% even after the bank said second-quarter profit surged to 696
million euros ($922.7 million), up from EUR56 million a year
earlier.
Outside the major indexes, UniCredit SpA climbed 2.2% after the
Italian bank said second-quarter net profit more than doubled from
the same period last year.
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