By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets struggled for
direction on Tuesday following two days of gains, after the German
ZEW survey indicated investors are less optimistic about the
economic future in the euro zone's largest economy than they were a
month ago.
The Stoxx Europe 600 index closed marginally higher at
334.60.
Among notable movers, shares of John Wood Group PLC climbed 6.7%
after the oil- and gas-services company posted a rise in 2013
pretax profit and said it is well positioned for the longer
term.
Delhaize Group SA gained 3.9% after Morgan Stanley lifted the
Belgian supermarkets firm to overweight from equal weight,
according to Dow Jones Newswires.
On a more downbeat note, shares of Industria de Diseno Textil SA
, also known as Inditex, dropped 4% after Citigroup cut the fashion
retailer to neutral from buy. The analysts said Inditex is one of
the few beneficiaries of the shift to online sales, but that the
Spanish firm will be impacted by emerging-market currency
translations.
Shares of Air Liquide SA fell 1.2% after the industrial-gas
supplier reported a slight drop in 2013 sales.
More broadly, investors digested the latest data from European
powerhouse Germany, which unexpectedly showed economists and
analysts are less confident about the economic future than they
were in January. The February ZEW indicator of economic sentiment
declined 6 points to 55.7 and missed analysts expectations of 62.7,
according to FactSet estimates. The drop marks the second weakening
in a row, following the January survey's fall to 61.7, after
reaching a seven-year high of 62 in December.
"This month's decline in economic expectations must not be
overstated. The majority of surveyed financial market experts
remain optimistic," ZEW President Clemens Fuest said in the
release.
The current-situation assessment was more upbeat and gained 8.8
points in February to 50, reaching its highest level since August
2011.
Germany's DAX 30 index closed slightly higher at 9,659.78.
Hochtief AG rallied 4.7% in Frankfurt after Goldman Sachs lifted
the construction firm to buy from neutral.
"Hochtief's ability to continue buying back its relatively small
free float (30%) adds technical support to a relatively attractive
valuation," the analysts said in a note.
France's CAC 40 index edged down 0.1% to 4,330.71 and the U.K.'s
FTSE 100 index gained 0.9% to 6,796.43.
In the U.K., the Office for National Statistics said annual
inflation fell to 1.9% in January from 2% a month earlier, slipping
below the Bank of England's target in January for the first time in
more than four years.
"This will have further strengthened the BOE's case that
interest rates should remain at current levels for the time being
and has sent speculators into frenzy," said Alex Conroy, financial
trader, at Spreadex in a note.
The U.K. benchmark was helped higher by oil firms, as they
tracked a rally in oil prices. Royal Dutch Shell PLC (RDSB) rose
1.8% and BP PLC (BP) advanced 1.5%.
Shares of Centrica PLC dropped 1.3% after UBS cut the utility
firm to sell from neutral. The analysts said the company faces
risks from political intervention as the Labour Party seeks to
freeze energy bills in the U.K.
Shares of InterContinental Hotels Group PLC gave up 3.2% after
analysts expressed concerns with the hotel operator's capital
expenditures in 2014.
Outside the major indexes, shares of Pandora AS climbed 2% after
the Danish jeweler said it will launch a new share-buyback program
as it posted record full-year revenue.
After being closed on Monday for Presidents Day, U.S. stocks
traded mostly higher on Wall Street, largely shrugging off a weak
report on manufacturing activity in the New York region and
downbeat housing data. The Empire State index fell more than
expected to 4.5 in February. Meanwhile, a gauge of confidence among
home builders plunged in February to the lowest level in nine
months.
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