By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stocks ended lower on Thursday,
though they pared intraday sharp losses after U.S. jobs and
retail-sales data beat expectations.
The Stoxx Europe 600 index fell 0.1% to close at 290.51,
extending losses into a fourth straight session.
The index has lost 3.5% in June to date, with investors worried
central banks will start to scale back stimulus measures, which
have been widely credited for the sharp rally earlier in the
year.
"We're still in a world where the main driver for market
direction is what central banks are saying and doing, and you can't
ignore that. The past two-to-three weeks prove that," said Neil
Wilkinson, senior fund manager at Royal London Asset
Management.
"The corporate-news flow is quiet after the first-quarter
earnings season ended, and with a lack of hard data, markets are
prone to speculate about the Fed," he added, referring to the
outlook for the Federal Reserve's monetary policy. "Another key
point is that volumes are thin; hence any moves are amplified," he
said.
Among major movers in the pan-European index, shares of Royal
Bank of Scotland Group PLC (RBS) dropped 3.3% after the bank said
late Wednesday that Chief Executive Stephen Hester will step downat
the end of the year.
Shares of private-hospital operator Rhoen-Klinikum AG surged
6.9% in Germany after shareholders agreed to change the firm's
strict voting statutes.
U.S. data help trim losses
The broader European stock markets trimmed losses in the
afternoon, after both U.S. retail-sales and jobless-claims data
beat expectations. Retail sales jumped 0.6% in May, while the
number of Americans who applied for unemployment benefit fell by
12,000 to 334,000 last week.
"These data points build a stronger case for Federal Reserve
tapering asset purchases in coming months," said Ishaq Siddiqi,
market strategist at ETX Capital, in a note. "This afternoon,
however, stock markets have responded better to good U.S. economic
data, but that's not a sign that nerves over tapering are easing.
No, instead it's a telling sign about stock market traders who are
opportunistic creatures, using this week's selloff as an excuse to
snap up some battered stocks," he added.
Data from the world's largest economy have been in the spotlight
after Fed Chairman Ben Bernanke in May said the central bank could
start tapering its bond purchases in coming months if data continue
to improve. The policy-setting committee meets next week, but is
widely expected to keep its easing program on hold.
"If the selloff continues, we might get some soothing comments
out of the Fed about QE and might get comments from Bernanke that
'I did say sustainable improvement and we haven't seen that,'"
Wilkinson from Royal London Asset Management said.
"If we get soothing comments from the FOMC meeting, we'll get a
kickback [in markets] pretty rapidly [... ] If we don't get
anything from the meeting next week, the question is how far will
this selloff go," he added.
U.S. stocks traded higher on Wall Street.
Bourses in Europe had opened with sharp losses on the back of
weak trading sessions in Asia, where stocks sank on continuing
concerns the U.S. Federal Reserve will soon withdraw its massive
liquidity injections. Japanese stocks plunged 6.4%, as a rally in
the yen hurt exporters.
Additionally, the World Bank late Wednesday cut its
economic-growth forecast to 2.2% expansion in 2013, down from a
2.4% projection issued in January and below last year's estimate of
2.3% growth.
Movers
Germany's DAX 30 index dropped 0.6% to 8,095.39, after earlier
slipping below the 8,000 level for the first time since early May.
ThyssenKrupp AG lost 2.4% and Siemens AG (SI) fell 1.5%.
France's CAC 40 index inched 0.1% higher to 3,797.98, while the
U.K.'s FTSE 100 index added 0.1% to 6,304.63.
Centrica PLC gained 1% in London after the gas-utility firm
bought a 25% stake in a shale-gas deal, marking the first big U.K.
name to enter the shale business.
Mining firms also supported the U.K. index, with shares of Rio
Tinto PLC (RIO) up 2.6% and BHP Billiton PLC (BHP) 1.8% higher.
Metals prices were, however, broadly lower.
Outside the major indexes, Banco Santander SA (SAN) lost 0.5%
after J.P. Morgan Cazenove cut the Spanish bank to underweight from
neutral.
Software AG dropped 2.9% after Credit Suisse cut the firm to
underperform from neutral.
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