By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved slightly
higher on Monday as investors digested a range of corporate news,
with GlaxoSmithKline PLC on the decline after admitting executives
may have breached Chinese law and UBS AG higher after a preliminary
earnings statement.
The Stoxx Europe 600 index added 0.2% to 300.30, marking the
highest close since late May. The index fluctuated between small
gains and losses for most of the trading day.
"There's very little on the agenda today to persuade investors
to take on any big positions. There's nothing to make investors
think that the economy is better or worse than when they left on
Friday. People are just treading water," said James Ashley, senior
European economist at RBC Capital Markets.
Instead, he said, investors were waiting for top-tier data
releases out later this week and next week.
"We can get a big surprise with the euro-zone PMIs on Wednesday
and this can determine how the markets will move. We also have U.K.
GDP on Thursday. But the potential for market-moving news is
greater next week when we have some notable events with the [U.S.
Federal Open Market Committee] meeting, Bank of England, European
Central Bank and [U.S.] nonfarm payrolls," he added.
Global investors have recently paid close attention to data
coming out of the U.S. to gauge whether they strengthen or weaken
the case for the Federal Reserve to taper its asset purchases. Fed
Chairman Ben Bernanke has said a reduction in purchases could
happen later this year, depending on the incoming data.
U.S. stocks were higher on Wall Street in Monday's trade.
KPN rallies on news of potential deal
Shares of Dutch telecom company KPN N.V. rallied nearly 13% on
Monday, leading gainers in the Stoxx 600 index after The Financial
Times reported that Spain's Telefonica SA is in advanced talks to
buy E-Plus, KPN's German mobile telecommunications business. KPN
and Telefónica Deutschland Holding AG subsequently issued
statements confirming the talks.
Shares of Telefónica Deutschland, Germany's third-largest
integrated telecoms operator, which is part of Telefonica SA,
gained 6.8%.
Shares of Telefonica closed up 1.3% in Madrid.
In London, shares of GlaxoSmithKline (GSK) (GSK) fell 1.2% after
the pharma major said some of its senior executives appeared to
have violated Chinese law. The statement came after Chinese
officials alleged that the company was involved in widespread
bribery in the country in order to get health-care providers to
prescribe its products.
Shares of Nokia Corp. (NOK) lost 1.2% after Oppenheimer cut the
firm to underperform.
On a more upbeat note, investors welcomed UBS's (UBS)
preliminary second-quarter results, sending the shares 2.5% higher.
The Swiss investment bank said its second-quarter results, which
are expected to be released in full on July 30, now include pretax
charges for litigation matters totaling about 865 million Swiss
francs ($919 million). UBS estimated that net income was 690
million Swiss francs. Additionally, the bank said it has settled
with a U.S. regulator over claims related to mortgage-backed
securities.
Investors in Europe also looked to Asia, where Japanese stocks
closed higher after Prime Minister Shinzo Abe's governing bloc won
a majority in Sunday's upper-house election.
Portuguese stocks rally
Back in Europe, Portugal's PSI 20 index rallied 2.3% to 5,651.40
after Prime Minister Pedro Passos Coelho vowed to stick to the
country's bailout program after weeks of political uncertainty.
Additionally, Coelho announced a cabinet reshuffle in which he
intends to name Paulo Portas, his junior coalition partner, as
Portugal's new deputy prime minister. Portas will be responsible
for dealing with the Troika.
In Germany, the Bundesbank said in its monthly bulletin that the
economy expanded strongly in the second quarter, an assessment that
has been confirmed by current indicators. However, there are signs
of a slowdown in economic growth in the summer quarter, the central
bank said.
The DAX 30 index closed slightly lower at 8,331.06.
Shares of Deutsche Bank AG (DB) rose 1.4% after the Financial
Times reported the bank plans to shrink its balance sheet by as
much as one-fifth, in order to comply with stricter
regulations.
Banks were also higher in France, where Société Générale SA
added 1.5% and BNP Paribas SA climbed 1.7%. France's CAC 40 index
gained 0.4% to 3,939.92.
The U.K.'s FTSE 100 index fell 0.1% to 6,623.17, weighed by
Glaxo.
Outside the major indexes, shares of Royal Philips NV (PHG)
climbed 2.1% after the firm reported a 2% rise in second-quarter
revenue, as sales in China and other emerging markets continued to
grow.
Shares of Saipem SpA picked up 2.7% after Barclays lifted the
Italian oil-services firm to overweight from equal weight.
Julius Baer Gruppe AG rallied 5.7% after the bank reported
first-half adjusted earnings per share at 1.23 Swiss francs, which
Credit Suisse called "solid" and said were 10% higher than
consensus expectations.
Ziggo NV dropped 2.9% after UBS cut the cable operator to
neutral from buy.
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