By Carla Mozee, MarketWatch
IMF raises euro zone growth outlook
LONDON (MarketWatch) -- European stocks dropped Tuesday,
overtaken by worries about Greece's persistent debt troubles, but
shares of Alcatel-Lucent SA were able to shine as the French
telecommunications-equipment company discusses a possible buyout by
Nokia Corp.
After a tentative start, the Stoxx Europe 600 closed down by
0.5% at 411.70, with only the basic materials and oil and gas
groups advancing. It was the first loss for the benchmark after
five sessions of gains.
Greece: Greece was back in focus, with the Financial Times
reporting
(http://www.ft.com/intl/cms/s/0/c5964f9c-e1ef-11e4-bb7f-00144feab7de.html)
the country is preparing to default on some of its debt payments if
talks with its creditors are unsuccessful. Greek Prime Minister
Alexis Tsipras denied there were plans for default. Yields on
short-term Greek bonds surged, and stocks were hit, leaving the
Athex Composite down 2.2% at 758.63.Trading was closed Monday for
the Orthodox Easter holiday.
"Until Mario Draghi appears [Wednesday] with what is likely to
be a calming balm of commentary about the pleasant effects of QE,
markets look vulnerable," wrote Chris Beauchamp, senior market
analyst at IG, about the Greek situation in a note.
European Central Bank President Draghi and his colleagues will
release their latest monetary policy decision on Wednesday.
Investors will look for Draghi's comments during his afternoon
press conference about the bank's EUR1.1 billion bond-purchasing
program, or so-called quantitative easing, launched in March. The
plan is aimed at reviving inflation and encouraging economic growth
in the eurozone.
There were upbeat economic developments for the euro zone
Tuesday. The International Monetary Fund
(http://www.marketwatch.com/story/imf-says-slowing-emerging-market-growth-is-sapping-global-economy-2015-04-14)
raised its growth forecast for the region to 1.5% for 2015, from a
previous estimate of 1.2%. The "euro area is showing signs of
picking up, supported by lower oil prices, low interest rates, and
a weaker euro," the group said.
Separately, the European Union's statistics agency said
industrial production climbed 1.1% in February
(http://www.marketwatch.com/story/eurozone-industrial-output-rises-sharply-2015-04-14)
from January, and higher by 1.6% than the same period a year
ago.
Benchmarks: On the major country indexes, Germany's DAX 30 fell
0.9% to 12,227.60. France's CAC 40 fell 0.7% to 5,218.06.
But Alcatel shares topped both the CAC and the Stoxx 600 as they
surged 16%, their strongest performance since late October,
according to FactSet data, after Finland's Nokia (NOK) confirmed it
is in advanced talks to buy its French rival. There are no details
about the possible valuation of the deal, which may not go through,
the companies said.
Nokia shares fell 3.6%.
A tie-up between the two networking and telecoms equipment
makers would follow years of speculation about a possible deal
(http://www.marketwatch.com/story/nokia-confirms-talks-to-buy-alcatel-lucent-2015-04-14).
If they merge, it would create a new global networking heavyweight
to rival Sweden's Ericsson (ERICY) and China's Huawei
Technologies.
European investors last week saw huge M&A deals announced,
with British oil giant Royal Dutch Shell PLC agreeing to take over
BG Group PLC for GBP47 billion ($68.7 billion), and Dutch
parcel-delivery company TNT Express NV agreeing to be purchased by
FedEx Corp. (FDX) for about EUR4.4 billion ($4.64 billion).
In London, the U.K.'s FTSE 100
(http://www.marketwatch.com/story/ftse-100-edges-higher-ahead-of-inflation-data-2015-04-14)
turned higher by 0.2% to 7,075.26. The pound (GBPUSD) had fallen
after the release of data showing U.K. consumer prices were flat in
March
(http://www.marketwatch.com/story/uk-consumer-prices-stay-flat-in-march-2015-04-14-4485508),
but later moved back above $1.47 following a smaller-than-expected
rise in U.S. retail sales in March.
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