European stocks were little changed this past week, following three weeks of gains, as concern U.S. lawmakers won’t agree on a budget before the holiday offset optimism that the euro area will get a single banking regulator.
PSA Peugeot Citroen SA soared 16 percent, the biggest rally on the Stoxx Europe 600 Index (SXXP) this past week, as the carmaker said it will cut another 1,500 jobs. Alcatel Lucent SA jumped 6.4 percent after winning a financing deal. Deutsche Bank AG declined 5.5 percent after Germany’s biggest lender said fourth- quarter profit will fall short of analysts’ estimates.
The benchmark Stoxx Europe 600 Index rose 0.1 percent to 279.4 this past week. The equity benchmark has rallied 19 percent from this year’s low on June 4 as the European Central Bank and the Federal Reserve introduced bond-buying programs.
“Investors have had a good year with good results and don’t want to take on more risk until the end of the year,” said Paulo Goncalves, financial assets manager at Banco Popular Portugal SA in Lisbon. “The market is hitting very close to resistance levels, so it’s now beginning to move sideways as we reach the end of the year.”
European stocks will struggle to extend their rally this year as the region’s benchmark measure trades close to a key resistance level. The Stoxx 600 remains stuck near the 50 percent Fibonacci retracement level of the slump between July 2007 and March 2009 in the aftermath of the financial crisis.
In the U.S., President Barack Obama reduced his demand for new tax revenue in the federal budget for 2013. Even so, congressional Republicans failed to accept the proposed changes, prompting concern that politicians will not reach agreement on the new budget before the end of the year.
More than $600 billion of tax increases and spending reductions will automatically come into force at the beginning of next year if no budget is agreed. Federal Reserve Chairman Ben S. Bernanke said that monetary stimulus alone cannot offset the effects of the so-called fiscal cliff.
European Union finance ministers agreed to put the ECB in charge of all large euro-area lenders. About 200 banks will qualify for oversight by the central bank rather than national regulators, Financial Services Commissioner Michel Barnier said.
In Europe, the finance ministers of the 17 nations using the single currency approved a 49.1 billion-euro ($64.5 billion) payment of aid to Greece after the country completed a buyback of its own debt. In Germany, a survey of economic expectations among investors and analysts rebounded this month. The ZEW Center for European Economic Research’s index rose to 6.9 from minus 15.7 in November, beating economists’ estimates.
China’s economy, the world’s second largest, may withstand a slowdown in exports as a report showed the country’s manufacturing industry may expand at a faster pace this month. Factory output increased in November for the first time in 13 months, according to the release from HSBC Holdings Plc and Markit Economics.
Peugeot soared 16 percent as Europe’s second-largest carmaker said it will cut an extra 1,500 jobs by 2014. The job losses will come on top of the 8,000 redundancies that the company announced in July. La Tribune, a French business newspaper, reported that Algeria’s government may buy a stake in Peugeot. It cited French envoy Jean-Pierre Raffarin.
A gauge of auto companies posted the biggest gain of the 19 industry groups in the Stoxx 600 this week. Renault added 6.2 percent as it sold its remaining stake in Swedish truckmaker Volvo AB for $1.92 billion. Daimler AG rose 4.8 percent after it appointed Hubertus Troska to its management board to revive sales growth in China. A release said Mercedes-Benz 11-month car sales climbed 5.1 percent.
Alcatel-Lucent SA jumped 6.4 percent as it obtained 1.6 billion euros in credit facilities underwritten by Goldman Sachs Group Inc. and Credit Suisse Group AG. The deal gives the French phone-equipment maker time to sell as much as 1.5 billion euros of assets. The shares have still dropped 24 percent this year as the company burns through cash.
Wacker Chemie AG, second-biggest maker of solar-grade silicon, rallied 13 percent as China’s government allocated 13 billion yuan ($2.1 billion) in subsidies for solar projects.
Deutsche Bank AG declined 5.5 percent after saying that increased restructuring costs will cause the lender to miss profit forecasts this quarter. Police raided the lender’s headquarters on Dec. 12 and arrested five suspects in a tax- evasion probe. Co-Chief Executive Officer Juergen Fitschen said the raids hindered the bank’s efforts to change its culture, Handelsblatt reported, citing an interview.
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