By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European shares traded in tight ranges
on Wednesday, as investors stayed on the sidelines ahead of a
policy decision from the U.S. Federal Reserve due after the market
close.
The Stoxx Europe 600 index inched 0.1% higher to 280.66, after
posting a seventh day winning streak on Tuesday.
"Traditionally markets rally into the year-end and the news on
the macro front aren't terrible," said Frances Hudson, global
thematic strategist at Standard Life Investments.
"For all the negative catalysts that are out there, we're kind
of wearing blinkers. We're aware of them, but choosing to focus on
something else," she said.
She explained that the so-called Santa rally was partly
exaggerated by low liquidity in the market.
"What would have been a small positive move in a more liquid
market becomes a bigger positive in this market," she said.
Shares of Peugeot SA surged 7%, as Bloomberg News reported that
the car maker will cut 1,500 jobs by 2014 as sales in Europe drop
to a 17-year low. A representative from Peugeot wasn't immediately
available to comment.
Also on the rise, shares of miner Anglo American PLC gained
1.8%, as Barclays lifted the stock to equal weight from
underweight.
For the broader stock markets, investors trained their eyes on
the U.S. Federal Reserve, due to announce its latest policy
decision at 5:30 p.m. London time, or 12:30 p.m. Eastern. The
central bank is widely expected to replace the expiring Operation
Twist bond-buying program with fresh monthly purchases of around
$45 billion of Treasurys to kick start growth in 2013.
"Although the labor market has improved in recent months, the
unemployment rate is still far from being within the Fed's comfort
zone and the economic recovery remains fragile," analysts at Danske
Bank said in a note.
"Fiscal policy looks set to remain a drag on growth next year
and 2014 and we think the Fed will not risk derailing the fragile
improvement with a premature removal of stimulus," they said.
Stock markets in Asia were on the rise ahead of the announcement
on optimism the Fed will provide the extra stimulus, as well as
hopes U.S. policy makers will reach an agreement on the fiscal
cliff. .
U.S. stock futures pointed to higher open on Wall Street. .
On the news front in Europe, data showed industrial production
in the euro zone slumped 1.4% in October month-on-month, below
analysts' expectations of a 0.2% rise.
"For those policy makers advocating further monetary easing then
this report will certainly provide yet further support for their
cause," said James Ashley, senior European economist at RBC Capital
Markets, in a note.
"But for those who, last week, were content to sit on the
sidelines (for the moment) then this is unlikely to change their
view substantially. If the data flow over the next few weeks
remains weak then we think the 'hawks' could yet soften their
opposition to a (refi) rate cut," he said.
The European Central Bank decided last week to leave interest
rates unchanged, although President Mario Draghi revealed at the
news conference that a rate cut had been discussed.
Movers
Among notable movers in Europe, shares of ThyssenKrupp AG jumped
3.6% to 17.80, after J.P. Morgan Cazenove reiterated its overweight
stance on the stock and lifted the price target to 22.00 from
17.00.
The DAX 30 index rose 0.2% to 7,607.78.
France's CAC 40 index dropped 0.2% to 3,640.81, with shares of
Accor SA down 1.3%.
And in the U.K., oil firms pushed higher, as oil prices climbed
above $86 a barrel. Shares of BP PLC gained 0.5% and Royal Dutch
Shell PLC (RDSB) picked up 0.8%.
The FTSE 100 index rose 0.2% at 5,937.82.
Outside the major indexes, shares of Industria de Diseno Textil
SA, also known as Inditex and owner of the Zara brand, dropped
0.4%, after reporting nine-months earnings, where sales rose 17%.
.
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