By Barbara Kollmeyer, MarketWatch
LONDON (MarketWatch) -- European stocks were in the red on
Thursday after a weaker-than-expected report on China's
manufacturing activity, which compounded the impact of some
hawkishness contained in the minutes of the Federal Reserve's
January meeting.
Economic data from the euro zone also hurt the Stoxx Europe 600
index , leaving it off 0.2% at 334.23, after edging up 0.1% on
Wednesday. The index started paring losses in afternoon action,
after U.S. stocks turned higher.
Among individual stocks, BAE Systems PLC (BAESY) slumped 7.8%
after the company posted a fall in 2013 net profit and guided lower
for 2014 earnings. A day earlier, Germany canceled a
multi-billion-euro order for the Eurofighter Typhoon jets, and that
overshadowed news about completion of talks to reprice a deal to
sell that aircraft to Saudi Arabia.
Randstad Holdings NV slid 10%. The Dutch staffing group said it
swung to a profit in the fourth quarter of 2013 and revenue rose
1%, and also expects a gradual recovery to continue.
Shares of packaging company Rexam PLC fell 2.2% after posting a
rise in full-year earnings as it won back North American market
share, but also saw weakness in Western Europe and South
America.
Aegon NV fell 6.3% after the Dutch insurer posted a 60% slide in
net profit owing to hedging losses.
On the upside, shares of Technip SA leapt 9% after the French
oil-services company said it expects an operating margin at its key
subsea unit of 12% in 2014, down from 13.5% in 2013. The company's
board approved a 10% dividend increase.
Setting the stage for European stocks, Asia markets suffered
losses across the board after sluggish trade data out of Japan and
a contraction in China's manufacturing sector to a seven-month low,
based on a preliminary HSBC/Markit "flash" version of its
Purchasing Managers' Index.
Though analysts said the data may not represent the full picture
for Chinese factories, it nonetheless added to gloom triggered by
Wednesday's Fed minutes that showed some members calling for a rise
in rise in short-term interest rates as early as mid-2015.
In Europe, Markit data showed business activity in the euro zone
lost momentum, owing to weakness in France, the region's
second-largest economy. The monthly gauge of activity across the
manufacturing and services sectors of the 18-nation euro zone, fell
to 52.7 in February from 52.9 the previous month.
French consumer prices posted a record fall in January,
retreating 0.6% from December, which was more than expected from
analysts polled by The Wall Street Journal.
The downbeat data could add more pressure on the European
Central Bank to lower interest rates or launch non-conventional
easing measures. Analysts at Danske Bank forecast that more
monetary easing could come as soon as the March meeting, when the
ECB staff forecasts are published, or in April when data are
expected to show inflation has dropped further.
"In our view, the communication from ECB members suggest that
the discussion is not about whether to ease again, but on which
instrument to use," Pernille Bomholdt Nielsen said in a note.
The French CAC 40 gained 0.2% to 4,348.09. Heavyweight Danone SA
rose 1.7%. The company said sales growth would be steady this year
as it posted a fall in net profit and operating profit also fell.
Veolia Environnement SA shares climbed 3.2% after announcing a
EUR500 million ($685 million) contract to handle waste management
in Buenos Aires.
The German DAX 30 index fell 0.6% to 9,599.17, with Bayer AG off
1% and BASF SE down 0.9%.
The FTSE 100 index rose 0.1% to 6,802.60.
In the U.S., stocks inched higher after the flash PMI for
February rose to the highest level since May 2010, suggesting that
the slowdown seen earlier this year from winter weather may be
temporary.
Painting a more downbeat picture, the Philadelphia Fed's
manufacturing index dropped sharply to a reading of negative 6.3 in
February from a 9.4 reading in January, well below a
MarketWatch-compiled economist forecast of 7.3.
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