By Sara Sjolin
LONDON (MarketWatch)--European stock markets hovered around the
flat line Thursday, with the benchmark index struggling to extend a
five-year high, after data showed industrial production in the euro
zone dropped sharply in July.
The Stoxx Europe 600 index lost 0.1% to 310.74, after closing at
the highest level since June 2008 Wednesday.
"We had a good few days of gains so markets are taking a bit of
a breather," said Joe Neighbour, trading analyst at Central
Markets.
"And next week we got the [Federal Open Market Committee]
meeting, when everyone is waiting to see whether the Fed will start
tapering. I think they will and the market has probably factored in
that there'll be some tapering off. Therefore, I think the market
is ready to push higher and not see it as all bad. When the dust
has settled, there's scope to go higher from here," he added.
Among notable movers in the pan-European index, Bouygues SA
jumped 7.2% after Credit Suisse lifted the industrial group to
neutral from underperform, with the analysts saying they are
positive about the firm's mobile unit.
Shares of Vivendi SA picked up 2.7% after the French media and
telecom firm said late Wednesday it is looking into plans to split
into two separate companies.
On a more downbeat note, shares of Cie. Financiere Richemont SA
gave up 2.3% after the luxury-goods retailer reported a slowdown in
sales growth.
More broadly investors digested disappointing data on euro-zone
industrial production. Output by factories in July fell to the
lowest level in more than three years, fueling concerns over
whether the region is able to keep its fragile economic recovery
alive.
Eurostat said industrial production across the region fell 1.5%
in July from June, the biggest fall since September last year.
Economists in a Dow Jones poll had anticipated a slight rise.
"A far steeper than anticipated fall in industrial production
across the euro area in July represents a hugely disappointing
start to the third quarter," said Chris Williamson, chief economist
at Markit, in a note.
"The data call into question the region's recovery that was
signaled after GDP rose a stronger than expected 0.3% in the second
quarter. There is clearly a risk that GDP could contract again in
the third quarter, as some of this second quarter growth proves to
have been only temporary (or perhaps even illusory)," he added.
Among country-specific indexes, the U.K.'s FTSE 100 index closed
marginally higher at 6,588.98, while Germany's DAX 30 index was
slightly lower at 8,494.00.
France's CAC 40 index dropped 0.3% to 4,106.63, after closing at
the second highest level in 2013 on Wednesday.
Weighing on the index in Paris, shares of Sanofi SA lost 2.6%
after the drug maker said withdrew the application for U.S.
approval of its lixisenatide drug.
And in Frankfurt, shares of Salzgitter AG dropped 2% after
Nomura cut the rating on the European steel sector to bearish from
neutral.
On a more upbeat note, shares of Wm. Morrison Supermarkets PLC
rose 1.8% in London after the supermarket chain said it expects
sales to improve in the second half and full-year performance to be
in line with its previous expectations.
Shares of Royal KPN NV added 2.3% after the telecom firm said it
remains in talks with America Movil SAB de CV about the planned
takeover offer for the Dutch firm.
In the U.S. markets traded lower. Data showed weekly jobless
claims fell below 300,000 for the first time since 2006, but the
government attributed the surprising plunge to computer-related
glitches instead of a sudden improvement in the labor market.
Write to Sara Sjolin at AskNewswires@dowjones.com