By Carla Mozee, MarketWatch

Bank shares lag as HSBC is knocked down after reporting a loss

European stocks edged higher Tuesday, aided by gains for miners, but the regional benchmark's advance was held back by the worst performance for HSBC PLC shares in more than a year.

The Stoxx Europe 600 was up 0.2% at 371.88, but the financial group was down nearly 1%. The pan-European index on Monday rose 0.2%. (http://www.marketwatch.com/story/european-stocks-step-higher-led-by-rbs-rolls-royce-2017-02-20)

European equities held onto higher ground after a better-than-expected preliminary reading on manufacturing activity in the eurozone. IHS Markit's February PMI gauge of eurozone manufacturing activity came in at 56.0, compared with a 54.3 estimate from FactSet.

HSBC slides: The Stoxx Europe 600 Banks Index lagged other sectors, as shares of HSBC (HSBA.LN) (HSBA.LN) (HSBA.LN) dropped 6.4%. The drop came after the Asia-focused bank reported a fourth-quarter net loss of $4.23 billion (http://www.marketwatch.com/story/hsbc-loss-widens-to-423b-plans-further-buyback-2017-02-21), widening from a loss of $1.33 billion a year ago. HSBC did say it plans to buy back an additional $1 billion of shares.

HSBC shares were moving toward their largest one-day percentage decline since August 2015, according to FactSet data.

"The extension of the group's share buyback by another $1 billion ... will go some way to cushioning the hit to sentiment ... however, we think applause for the additional payout is somewhat muted, in view of HSBC's backsliding common-equity tier-one ratio," said Ken Odeluga, market analyst at City Index, in a note.

Odeluga noted that the ratio was at 13.6% at the end of its year, compared with 13.9% in its third quarter.

"It's a modest retreat of regulatory capital, so direct consequences will be immaterial, but again, the timing is unfortunate," he said.

Movers: At the bottom of the Stoxx 600 were shares of John Wood Group PLC (WG.LN) , as they tanked 10.8%. The oil-services company's yearly net profit fell to $27.8 million (http://www.marketwatch.com/story/john-wood-yearly-profit-drops-but-dividend-raised-2017-02-21), from $79 million the previous year, as revenue fell.

But elsewhere in the commodities group, BHP Billiton (BLT.LN) (BHP.AU) (BHP.AU) shares rose 0.4%. The world's largest miner by market value swung to a profit of $3.20 billion in its fiscal first half (http://www.marketwatch.com/story/bhp-billiton-returns-to-profit-raises-dividend-2017-02-21-04855710), aided by higher commodity prices and cost cutting. BHP also said it's raising its dividend.

Anglo American PLC (AAL.LN) also said Tuesday it has swung to a yearly profit, making $1.6 billion as commodity prices have increased (http://www.marketwatch.com/story/anglo-american-swings-to-profit-on-rising-prices-2017-02-21). But the miner's shares were losing steam, down 0.4%.

Among the session's best performers was InterContinental Hotels Group PLC. (IHG) Shares rose 2% after the company behind the Crowe Plaza and Holiday Inn chains raised its dividend by 11% (http://www.marketwatch.com/story/ihg-underlying-2016-profit-rises-hikes-dividend-2017-02-21) and reported higher underlying earnings for 2016.

Economic docket: A rise in the price of energy and fresh produce lifted French inflation (http://www.marketwatch.com/story/french-inflation-up-13-on-year-lower-on-month-2017-02-21) in January, according to national statistics agency Insee. France's Consumer Price Index increased 1.3% on the year, but was 0.2% lower on the month.

The euro was buying $1.0553, compared with $1.0609 late Monday in New York. The dollar was rising against major rivals after Philadelphia Federal Reserve Bank President Patrick Harker, in an interview with Market News International, said he would likely support an interest rate increase in March (http://www.marketwatch.com/story/dollar-rises-after-fed-comments-euro-weakens-2017-02-21) if he sees additional evidence that U.S. inflation is gaining momentum.

(END) Dow Jones Newswires

February 21, 2017 05:22 ET (10:22 GMT)

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