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MARKET COMMENT: Europe Stocks Pull Back From Eight-Month High
19/3/2012
19:55
   By Sara Sjolin 
 

LONDON -(Dow Jones)- European stocks pulled back from an eight-month high Monday, as investors paused after recent rallies, while TNT Express NV rose after a takeover agreement.

The Stoxx Europe 600 index closed 0.1% lower at 272.07, breaking a four-session winning streak.

"We have entered the doldrums of market indecision, where direction is not being led by any data or any outright sentiment," said Owen Ireland, broker at Valbury Capital, in a note.

"This pause could simply be a sign that traders aren't willing to completely sell into the off-risk days, and that the longer-term gist is one of positivity," he added.

Among gainers in Europe, shares of TNT Express rose 1.1% after United Parcel Service Inc. agreed to pay $6.77 billion for the Dutch freight firm--a 54% premium to TNT Express's closing price Feb. 16, just before the companies said they were in talks.

Among notable decliners, logistics firm DSV AS shed 2% as UBS downgraded the stock to neutral from buy, citing limited upside potential at the moment.

Elsewhere, auto makers weighed on the indexes.

In Germany, BMW AG traded 1.6% lower after Goldman Sachs affirmed its buy rating on the stock but removed it from its conviction-buy list.

On Friday, the broader European auto sector was cut to neutral by Bernstein & Co.

Daimler AG lost 0.2%, Volkswagen AG shed 0.9, while Porsche Automobil Holding SE declined 2.2% outside the main index.

The DAX 30 index was off 0.1% at 7,154.22, further weighed by E.ON AG down 1% as Morgan Stanley downgraded the European energy sector to neutral from overweight.

However, both the German index and other European equities have room to rise in the medium-term and post gains in the second half of the year, Andreas Hurkamp, equity markets strategist at Commerzbank, said.

"In Germany, we had 19 firms raising dividends during earnings season and only three firms downgraded dividends. It's a clear sign that companies with focus on the global consumer will continue to release good earnings statements and perform well in coming months," he said.

"We might get a setback the next week and see a 5% to 10% correction, but it's a chance to increase exposure to global growth winners," he added, pointing to auto makers, chemicals and industrials as the winning sectors.

In France, Renault SA was off 1%, adding pressure to the CAC 40 index, which closed 0.5% lower at 3,577.88.

Auto maker Peugeot SA stood out among car makers, rising 4.9%.

General Motors Co. Chief Executive Dan Akerson told The Wall Street Journal that the two car firms will begin joint developments of at least two passengers cars by this fall.

A spokesperson from Peugeot wasn't immediately available to comment.

Also weighing in Paris, Carrefour SA shed 1.7% after the retailer temporarily closed a store in China after alleged problems with meat labeling.

In the U.K. the FTSE 100 index fell 0.1% to 5,961.11 as banks and utilities firms edged lower.

Among U.K. banks, Barclays PLC declined 1.1%, Standard Chartered PLC fell 1% and HSBC Holdings PLC lost 0.5%.

Electric utility firm National Grid PLC lost 1.9% after Bank of America Merrill Lynch cut the stock to neutral from buy on valuation grounds.

International Power PLC followed and declined 1.1%.

Supporting the U.K. index, Vodafone Group PLC added 0.6%.

The Sunday Times reported that the telecom firm may save GBP1 billion in taxes if it succeeds in bidding for Cable & Wireless Worldwide.

Shares of Cable & Wireless Worldwide rose 3%.

Further bucking the negative trend in Europe, the Athens General Index traded 1.6% higher at 776.79, buoyed by National bank of Greece SA jumping 6.2% and Hellenic Telecommunications Organization taking on 5%.

Prime Minister Lucas Papademos, in an interview with the Financial Times, said the debt-laden country is halfway to economic recovery.

Also related to Greece, an auction determined that the total payout to settle credit default contracts to insure against a Greek default will pay out around $2.5 billion.

-By Sara Sjolin; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

March 19, 2012 13:55 ET (17:55 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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