By Sara Sjolin, MarketWatch
COPENHAGEN (MarketWatch) -- European stock markets struggled for
direction on Friday, as investors tried to gauge whether a mixed
report on retail sales from the U.S. will weaken or strengthen the
case for the Federal Reserve to taper its asset purchases.
The Stoxx Europe 600 index was flat around 310.74, on track for
a 1.5% weekly gain.
The benchmark has gained 4.5% so far in September and Atif
Latif, director of trading at Guardian Stockbrokers, said that
generally the equity market is in good shape as the "cyclical
recovery remains on track and macro indicators are positive."
"And with global equities still trading below historical
averages we remain bullish," he added.
Among notable movers in the index, shares of Kabel Deutschland
Holding AG jumped 6.2% after Vodafone Group PLC (VOD) said it has
secured enough shares in the German cable firm to succeed with the
proposed take-over. Vodafone shares inched 0.8% higher in
London.
Shares of Fresenius SE & Co. KGaA gained 4.8% after its
Helios subsidiary agreed to buy 43 hospitals from Rhoen-Klinikum AG
, making Fresenius Helios the largest private hospital operator in
Europe, according to the release.
Shares of Rhoen-Klinikum jumped 11.6%.
Mining firms posted some of the biggest losses as metals prices
broadly moved lower. Shares of Polymetal International PLC dropped
4%, Anglo American PLC fell 3.4% and heavyweight Rio Tinto PLC
(RIO) (RIO) lost 2.1%.
U.S. tapering fears
More broadly, investors turned their attention away from Syria
as the risk of a U.S. military strike receded. U.S. Secretary of
State John Kerry and Russian Foreign Minister Sergei Lavrov were
set to conclude the final day of talks in Geneva on Friday to study
the proposal for Damascus to give up its chemical weapons.
Instead, market participants focused more on the U.S. Federal
Reserve meeting next week, waiting to see whether the central bank
will start scaling back its $85-billion-a-month-asset purchase
program. Analysts speculate that recent upbeat data will make for a
strong enough case for the Fed to begin the tapering process at the
meeting.
Data out on Friday showed U.S. sales rose 0.2% in August -- less
than Wall Street expected -- but sales July and June were revised
higher.
"A rational market would respond more to the positive revisions
than to the headline disappointment. The core measure which
excludes cars and gas station sales was revised to its strongest
monthly pace this year. This report will not dissuade the Fed from
its chosen course next week," said Guy Foster, head of portfolio
strategy at Brewin Dolphin.
Later in the day, University of Michigan consumer-sentiment
index for September is out.
"Investors are looking to the University of Michigan to gauge
whether sequestration, tapering and the slower pace of job creation
are impacting ordinary household's, or whether it is only aspiring
house purchasers who are finding things a bit more difficult,"
Foster said.
Speculation on who will succeed current Fed Chairman Ben
Bernanke were also put on the table on Friday. A report by Japanese
newspaper Nikkei, citing unnamed sources, said President Barack
Obama plans to name former U.S. Treasury Secretary Lawrence Summers
as the next chairman of the U.S. Federal Reserve board of governors
possibly as soon as next week. Summers is seen as more skeptical
toward quantitative easing than Janet Yellen, who had been
considered one of the front-runners to become the Fed's next
chief.
U.S. stock futures pointed to a higher open on Wall Street.
Among country-specific indexes in Europe, the U.K.'s FTSE 100
index fell 0.3% to 6,571.38, trimming its weekly gain to 0.4%.
France's CAC 40 index was marginally lower at 4,105.72, but was
on track to gain 1.4% on the week.
Germany's DAX 30 index gained 0.1% to 8,505.88. The German
benchmark was poised to close 2.8% higher on the week.
Shares of Munich Reinsurance Co. gained 2.4% in Frankfurt after
J.P. Morgan Cazenove lifted the firm to overweight from
neutral.
Outside the major indexes, shares of Carlsberg AS rose 1.7% in
Copenhagen after Goldman Sachs lifted the brewer to neutral from
sell and removed it from the pan-Europe sell list.
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