By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved cautiously
higher on Tuesday, as investors remained wary ahead of the U.S.
Federal Reserve's policy meeting, on fears it could signal a
potential slowdown in the bank's asset purchases.
The Stoxx Europe 600 index was marginally higher at 293.31,
after climbing 0.7% on Monday.
Shares of Danske Bank AS posted one of biggest losses in the
index, off 5.7%, after the Danish Financial Supervisory Authority
ordered the bank to adjust its internal rating model, saying the
lender underestimated its risky assets.
On a more upbeat note, shares of Whitbread PLC gained 3.7% after
the hotel and restaurant operator reported a 13.8% rise in total
sales, as cold weather boosted sales at coffee shops.
Shares of Kabel Deutschland Holdings AG climbed 3.9% after the
firm confirmed late Monday it has received a preliminary takeover
proposal from Liberty Global PLC (LBTYA).
For the broader European stock markets, investors were cautious
about placing any big positions ahead of the U.S. Fed's two-day
meeting, which ends Wednesday. A report in the Financial Times said
late Monday that Fed Chairman Ben Bernanke is likely to signal the
central bank is close to scaling back its $85-billion-a-month
asset-purchase program, as the economy is getting stronger.
The report curbed enthusiasm on the U.S. markets on Monday,
prompting Financial Times editor and writer of the commentary Robin
Harding to tweet that "people need to chill out. The Fed does not
leak anything to any journalist to steer markets."
"On QE tapering, we think Bernanke will repeat the message that
the timing of tapering is completely data-dependent. He is unlikely
to give more-precise indications than to repeat that if the labor
market continues to improve, QE tapering could start within the
next few meetings. We continue to see a 50/50 chance of a September
or a December start to tapering," analysts at Danske Bank said in a
note.
"So far, job growth is set to stay around the 170,000 level in
June, based on the most recent jobless claims data. This is just
enough to keep expectations for a September move alive, but if
inflation expectations continue to trend lower over the coming
months and job growth stays below 200,000, this could push the
first tapering into December," they added.
Inflation was also in the U.S. data headlines on Tuesday, after
a report showed the consumer-price index rose a seasonally adjusted
0.1% in May, as the inflationary pressure on the broader economy
was largely subdued.
Additionally, U.S. housing starts picked up 6.8% in May,
signaling continued healthy activity in the building sector.
U.S. stocks opened higher on Wall Street.
Back in Europe, the ZEW indicator for economic sentiment in
Germany improved 2.1 points in June to 38.5, slightly better than
expectations of a 38 print.
Among notable movers in Europe, car makers posted some of the
biggest losses, after data showed new car registrations in the
European Union dropped to the lowest level in 20 years in May.
Shares of Daimler AG lost 1.4% in Frankfurt, BMW AG shaved off
1.3% and Volkswagen AG fell 1.5%.
And in Italy, Fiat SpA gave up 0.8%.
Among country-specific indexes, Germany's DAX 30 index was
slightly lower at 8,212.37, while France's CAC 40 index dropped
0.3% to 3,850.47.
The U.K.'s FTSE 100 index climbed 0.8% to 6,380.21, boosted by
HSBC Holdings PLC (HBC) . The bank climbed 2.6% after Citigroup
lifted the stock to buy from neutral.
Shares of EasyJet PLC added 2.9% after the budget airline said
it will buy 135 A320 planes from Airbus for delivery between 2015
and 2022.
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