By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- Ratings downgrades for utility stocks in
Europe and for German financial firm Commerzbank AG on Thursday
limited a gain for Europe's equity benchmark, but the move was
enough to keep the index at a six-year high.
Trading volumes were lighter than usual as markets in Austria,
Switzerland, Denmark, Finland, Iceland, Norway and Sweden were
closed for the Ascension Day holiday.
The benchmark Stoxx Europe 600 ended up 0.1% to 344.51 after
spending the session darting between small gains and losses. The
index on Wednesday shed 0.1%, marking its first loss in six
sessions.
Shares of Enel SpA and Endesa SpA ranked among Thursday's
biggest decliners, falling 1.8% and 1.4%, respectively. Citi
downgraded utility Enel to a sell rating, saying the company's
equity story, predicated on per-share earnings and dividend
per-share growth, will in part be challenged by declining supply
margins in Italy and Spain. Spanish utility Endesa's rating was
also cut to sell after a strong price-share performance and reduced
earnings expectations.
Citi cut Energias de Portugal to sell, prompting its shares to
decline 0.9%.
The Stoxx 600's worst price performer on Thursday was Kingfisher
PLC as its shares fell 4.9%. The home-improvement retailer's
first-quarter trading update showed growth in total sales to 2.8
billion pounds ($4.7 billion), but the company also noted ongoing
weak consumer confidence in France, one of its largest markets.
Kingfisher's properties include B&Q, Screwfix and
Castorama.
Also hit were shares of Commerzbank AG , down 2.3% after Exane
BNP Paribas cut its rating on the financial institution to neutral
from outperform. Exane said it upgraded Commerzbank nine months ago
as it believed there was a "reasonable chance" that Commerzbank
would pass a European Central Bank stress test. "While our view has
not changed dramatically, the combination of lower earnings and a
more challenging capital path has weakened our conviction," said
Exane in a note to clients.
Commerzbank was the biggest decliner on Germany's DAX 30 index ,
which slipped less than 1 point to 9,938.90. The DAX earlier this
week reached a record high.
Meanwhile, Smith & Nephew PLC topped advancers on the U.K.'s
FTSE 100 index with a 3.6% move higher. The head of Stryker Corp.
(SYK) told Fox Business the medical-devices company had been
working on a bid for the London-based artificial joints maker. On
Wednesday, Stryker issued a statement saying it hadn't made an
acquisition offer.
A potential acquisition of Boston-based asset manager Numeric
Holdings by Man Group PLC sent shares of the British hedge-fund
manager higher by 5%. A transaction would likely be done by cash
only as Man has a large cash balance, and cash transactions are
typically "highly accretive," wrote RBC Capital Markets analyst
Peter Lenardos in a report. A deal would move Man further away from
its AHL hedge fund, and be in line with Man's strategy to buy an
asset manager based in the U.S., he said.
"However, given the extremely limited information available,
especially on profitability and price, we reserve judgment until
more details emerge," said Lenardos.
In other developments, Spain cut its economic-growth forecast
for the first quarter to 0.5% from a previous estimate of 0.6%.
Spain's IBEX 35 closed down 0.2% at 10,734.80.
In France, France's CAC 40 fell 1.1 points to 4,530.51.
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