European Stocks Swing Between Gains, Losses Before ECB
European stocks closed little changed, after swinging between gains and losses, as investors await tomorrow’s European Central Bank meeting.
Cie. Financiere Richemont SA advanced 1.5 percent after the maker of Cartier jewelery reported five-month sales rose 23 percent. BP Plc (BP/) fell 2.9 percent after the U.S. Department of Justice reiterated it will pursue charges of gross negligence for the worst U.S. oil spill two years ago. Nokia Oyj sank the most in almost three months after unveiling two Microsoft Corp.- powered smartphones.
The Stoxx Europe 600 Index rose less than 0.1 percent to 265.49 at the close of trade after swinging between gains and losses at least 16 times. The gauge pared losses of as much as 0.5 percent as officials briefed on the proposal said ECB President Mario Draghi’s bond-buying plans involve unlimited government debt purchases that will be sterilized to assuage concerns about printing money.
“We are coming into the eye of the storm with regards to event risk, and today will really be the last day traders can tweak portfolios ahead of the key ECB meeting and U.S. payrolls on Friday,” said Chris Weston, an institutional dealer at IG Markets in Melbourne, in a note to clients. “After last night’s adjustment to expectations to the upcoming ECB meeting, we feel the market has a more neutral approach to what is likely to be delivered.”
Under Draghi’s proposed blueprint, which may be called “Monetary Outright Transactions,” the ECB would refrain from setting a public cap on yields, according to two central bank officials, and a third official, who spoke on condition of anonymity. The plan will only focus on government bonds rather than a broader range of assets and will target short-dated maturities of up to about three years, two of the people said.
An ECB spokesman referred to an Aug. 20 statement in which the Frankfurt-based central bank said it was misleading to report on decisions that haven’t been taken yet.
Draghi told the European (SXXP) Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in the fragmented euro-area economy and ensure the survival of the common currency. Policy makers will start deliberating on the plan later today and Draghi will announce whether it has been agreed to at a press conference tomorrow.
The benchmark SXXP has surged 14 percent from its lowest level this year on June 4 amid speculation that central banks will do more to support growth.
U.S. data on Sept 7. will show payrolls in the world’s biggest economy probably grew at a slower pace in August and unemployment exceeded 8 percent for a 43rd month, economists said before a report from the Labor Department.
National benchmark indexes advanced in 12 of the 18 western-European markets. The U.K.’s FTSE 100 Index fell 0.3 percent. France’s CAC 40 gained 0.2 percent and Germany’s DAX rose 0.5 percent.
Richemont (CFR) added 1.5 percent to 60.05 Swiss francs after the world’s largest jewelry maker reported revenue that climbed 23 percent in the five months through August as the dollar’s strength boosted the value of sales in that currency.
That matched the average estimate of eight analysts surveyed by Bloomberg. Excluding currency shifts, revenue rose 13 percent. The maker of Jaeger-LeCoultre timepieces reiterated that first-half profit will rise as much as 40 percent.
ING Groep NV (INGA) added 1.5 percent to 6.10 euros after the company raised about $3 billion with the sale of 54 million Capital One Financial Corp. (COF) shares received when the Dutch lender sold its U.S. online bank this year. The shares were priced at $55.75 each.
Britvic Plc (BVIC) surged 13 percent to 369.9 pence, for the biggest advance on the Stoxx 600. The U.K. maker of Robinsons Barley Water said it’s been approached by A.G. Barr Plc about an all-share merger and has started talks to create one of Europe’s biggest soft-drink businesses. A.G. Barr’s shares climbed 8.3 percent to 450.2 pence.
BP, the owner of the Macondo well that caused the worst U.S. oil spill two years ago, slid 2.9 percent to 423.85 pence after the U.S. Justice Department reiterated it will pursue charges of gross negligence in the case. The company faces a trial with the DOJ after reaching a $7.8 billion settlement in March with victims of the spill.
Nokia (NOK1V) sank 13 percent to 1.99 euro after the second-biggest maker of mobile phones unveiled two smartphones using Microsoft’s new Windows Phone software to help win back sales lost to the iPhone and Android handset makers.
STMicroelectronics NV (STM) declined 4.9 percent to 4.40 euros after UBS AG lowered its recommendation for the biggest European chipmaker to sell from neutral, saying its share price doesn’t take account of continuing challenges to the business. Exane BNP Paribas also downgraded the shares to underperform, the equivalent of a sell rating, from neutral.
Vestas Wind Systems A/S (VWS), the world’s biggest wind turbine maker, fell 8.3 percent to 44.5 kroner, halting four days of gains. DNB Markets said recent jump in the shares was an overreaction to takeover speculation.
The shares had surged 43 percent since the company on Aug. 27 said it was in “strategic” talks with Mitsubishi Heavy Industries Ltd. DNB downgraded the shares to sell from buy.
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