By Sara Sjolin, MarketWatch
MADRID (MarketWatch) -- European stock markets struggled for
direction on Friday, as investors tried to gauge whether U.S. data
would weaken or strengthen the case for the Federal Reserve to
taper its asset purchases.
The Stoxx Europe 600 index was flat around 310.74, putting it 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.
Shares of Kabel Deutschland Holding AG jumped 6.3% after
Vodafone Group PLC (VOD) said it has secured enough shares in the
German cable firm to succeed with the proposed takeover. Vodafone
shares inched 0.8% higher in London.
Shares of Fresenius SE & Co. KGaA gained 4.3% 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 12.6%.
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 3.7% and heavyweight Rio Tinto PLC
(RIO) (RIO) lost 2.1%.
U.S. tapering fears
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 in 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.
The University of Michigan consumer-sentiment index for
September fell to 76.8, the lowest level since April, from a final
reading of 82.1. Economists surveyed by MarketWatch expected a
level of 81.5 in September.
Some said the Fed's tapering case may not hold now. "Consumer
confidence as reflected in today's worse-than-expected retail sales
and University of Michigan confidence continues to drop, just as
the market is discussing an exit from the easy-money policy of Fed
QE," said Douglas C. Borthwick, managing director of Chapdelaine
Foreign Exchange, in a note. "I believe it unlikely that the Fed
will taper the Sugar-bowl of QE from the economy for as long as its
effects are waning," he said.
Speculation on who will succeed current Fed Chairman Ben
Bernanke was also put on the table on Friday. The White House
denied a report by Japanese newspaper Nikkei, citing unnamed
sources, that 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.
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 off 0.2% to 4,096.63, but was on track
to gain 1.2% on the week.
Germany's DAX 30 index fell 0.2% to 8,481.61. The German
benchmark was poised to close 1.8% higher on the week.
Shares of Munich Reinsurance Co. gained 3% in Frankfurt after
J.P. Morgan Cazenove lifted the firm to overweight from
neutral.
Outside the major indexes, shares of Carlsberg AS rose 1.8% 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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