By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks fell Wednesday as the
euro regained traction against the dollar, keeping German shares
from advancing in the wake of encouraging data from Europe's
largest economy.
The Stoxx Europe 600 dropped 0.8% to 399.44, with none of the
major sectors moving higher.
The pan-European index was stuck in the red after a
better-than-expected report on German business sentiment. The Ifo
Institute's business-climate indicator
(http://www.marketwatch.com/story/ifo-german-business-confidence-rises-again-2015-03-25)
was at 107.9 in March, above the 107.3 forecast by a Wall Street
Journal survey of economists. The March reading was the highest
since July 2014.
"Germany's strength is good news for the rest of the eurozone,
although the firming recovery in countries like Spain and even
Italy means they may be less dependent on German demand than during
the depths of the crisis in 2011/12," said Christian Schulz, senior
economist at Berenberg, wrote in a report.
Despite the brighter sentiment figures, Germany's DAX 30 fell
further as the session wore on, losing 0.9% to 11,901.50.
The German index "is generally playing on the [euro-dollar]
trade now," and the euro's advance against the greenback "impacts
negatively on the highly weighted exporters on the DAX," said
Richard Perry, market analyst at Hantec Markets, in emailed
comments.
But Perry said he doesn't see this as too negative, with the
"nice" three-month upward trend intact. The DAX has charged up
nearly 22% this year to record highs, benefiting from the
devaluation of the euro stemming from a European Central Bank
asset-purchase program worth 1.1 trillion euros ($1.21
trillion).
The euro (EURUSD) on Wednesday was buying $1.0989, up from
$1.0926 late Tuesday.
While the euro in that trade "has remained resilient this week,
it's still just flirting with a downtrend resistance line that has
been in place since December last year," said Stan Shamu, market
strategist at IG, in a note Wednesday. "Until we see a close above
$1.1000, I wouldn't be jumping into longs just yet as the
medium-term trend is still lower."
In Frankfurt, shares of Deutsche Lufthansa SA fell 1.2%,
extending losses in the wake of Tuesday's deadly Germanwings plane
crash
(http://www.marketwatch.com/story/france-launches-difficult-search-and-recovery-for-germanwings-flight-9525-2015-03-25)
in the French Alps.
France's CAC 40 gave up 0.9% at 5,045.09. Among the worst
performers on both the CAC and the Stoxx 600 was Accor SA . Its
shares dropped 3.5% after Eurazeo SA and Colony Capital said they
plan to sell a 9.65% stake in the French company behind the Sofitel
and Novotel hotel brands.
The U.K.'s FTSE 100
(http://www.marketwatch.com/story/ftse-100-edges-up-but-barclays-falls-after-downgrade-2015-03-25)
shed 2 points at 7,017.81, with shares of Barclays PLC down 2.1%
following a ratings downgrade at Investec to hold from buy.
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