By Sara Sjolin and Barbara Kollmeyer, MarketWatch

LONDON (MarketWatch) -- European stock markets posted the first winning session in four on Wednesday, with drug makers and banks helping out, but sentiment was dogged by weak euro-zone retail sales and renewed selling on Wall Street.

Investors were also looking ahead to Thursday's European Central Bank meeting and expectations of another cut in the repo rate.

The Stoxx Europe 600 index bounced around in the afternoon, but closed 0.1% higher at 318.04. On Tuesday, the benchmark closed at the lowest level since Dec. 18 amid a wider global selloff.

Among notable movers, shares of Swatch Group AG jumped 4% after the watchmaker reported better-than-expected full-year earnings for 2013 and forecast a rebound in demand from China.

GlaxoSmithKline PLC rose 1.6%, giving a boost to the main Europe index and the FTSE 100 index after the drug maker posted a full-year sales gain after two years of falling revenue.

Swedish engineering firm Alfa Laval AB rallied 4.6% after reporting a 16% rise in order intake and a 9% improvement in net sales in the fourth quarter.

On a more downbeat note, shares of Syngenta AG lost 3.4% after the seed and chemical firm said profit dropped in 2013.

More broadly, European indexes briefly shed earlier gains in the afternoon after the ADP employment data for the U.S. showed 175,000 private-sector jobs were added to the economy in January and Wall Street appeared to give up on a rally that began on Tuesday. Economists surveyed by Bloomberg had expected a reading of 185,000.

The data came ahead of the closely watched nonfarm-payrolls report out on Friday, which is expected to show 190,000 new jobs were added to the economy in January and that the unemployment rate dropped to 6.6%, according to a MarketWatch poll.

In Europe, data for Spain showed activity in the country's services sector increased at the fastest pace in six-and-a-half years in January, with the first rise in employment since February 2008. The IBEX 35 index rose 0.2% to 9,775.

Other data showed retail sales data for the euro zone coming in much weaker than expected, which took some shine off markets earlier in the day. Retail sales fell 1.6% in the euro zone in December and November sales were revised sharply lower, to a gain of 0.9% from a prior 1.4% rise. German retail sales suffered the biggest drop of the region with a 2.4% fall.

Analysts at Danske Bank said the data would give the European Central Bank something to think about at Thursday's meeting and they expect the refinancing rate will be cut to 0.1%.

"It previously seemed there was an upside risk to our forecast for private consumption, but with the latest decline and the revision, this does not seem to be the case any longer," the analysts said in a note.

Germany's DAX 30 index was underperforming the rest of Europe with a 0.1% drop to 9,116.32. ThyssenKrupp AG added pressure in Frankfurt, off 2.5%, after HSBC cut the industrial conglomerate to underweight from neutral.

Elsewhere, France's CAC 40 index closed flat at 4,117.79, and the U.K.'s FTSE 100 index rose 0.1% to 6,457.89.

ArcelorMittal SA climbed 1.6% in Paris after HSBC lifted the steelmaker to overweight from neutral.

Greek stocks outperformed the rest of Europe, with the ASE Composite index jumping 2.3% to 1,240.11. The gains came after Bloomberg News reported that the next bailout for Greece could include a maturity on bonds that extends to 50 years and cutting the interest rate on some previous aid by 50 basis points. Bloomberg cited European Union sources.

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