By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets were on track to
break a five-day winning streak on Thursday, following
disappointing trading updates from Zurich Insurance Group AG and
Hennes & Mauritz AB.
The Stoxx Europe 600 index shed 1.2% to 305.04, wiping out much
of the 1.9% runup made over the previous five sessions. On
Wednesday, the index closed at its highest level since May 22 after
data showed the euro zone emerged from a six-quarter-long
recession. Read: Euro-zone GDP: Time to pop the champagne?
Drug makers added the most pressure on the benchmark on Thursday
after a round of ratings changes. Shares of AstraZeneca PLC (AZN)
lost 2.8% after Morgan Stanley cut the pharma firm to underweight
from equal weight. GlaxoSmithKline PLC (GSK) got the same
treatment, and its shares dropped 1.9%.
Among other notable decliners, shares of Zurich Insurance Group
dropped 3.7% after the company reported a 27% decline in
second-quarter income. The firm said the flooding in Eastern and
Central Europe, and U.S. tornadoes, weighed on earnings.
Hennes & Mauritz gave up 2% after the Swedish fashion
retailer posted a 1% fall in comparable sales in July.
The overall negative sentiment in Europe followed weak trading
sessions in Asia and the U.S., with ongoing worries about the
timing and pace of potential reductions in the U.S. Federal
Reserve's bond purchases upsetting the markets.
Further adding to the tapering fears, data Thursday showed
weekly jobless claims in the U.S. fell by 15,000 to 320,000,
hitting the lowest level of initial claims since October 2007, two
months before the Great Recession started. Fed Chairman Ben
Bernanke has said any reduction in bond buying is dependent on
improvements in macroeconomic data, with the labor market seen as
one of the major focal points.
Also on the data front in the U.S., the New York Fed's "Empire
State" general business conditions index fell to 8.2 in August from
9.5 in July, while industrial production was flat in July.
In the U.K., data showed retail sales rose 1.1% in on the month
in July and jumped 3% on the year. Economists had forecast sales to
rise 0.7% on the month and 2.5% on the year.
The data, however, failed to boost the U.K.'s FTSE 100 index ,
which dropped 1.6% to 6,480.21.
Germany's DAX 30 index fell 1.1% to 8,347.91, while France's CAC
40 index lost 0.9% to 4,078.72.
Among notable movers, shares of Ophir Energy PLC sank 12% after
the oil- and gas-exploration firm reported a loss in the first half
of the year.
Oriflame Cosmetics SA (ORFLY) lost 5.9% after the Swedish
company reported a drop in second-quarter sales.
On a more upbeat note, shares of Imperial Tobacco Group PLC
(ITYBY) picked up 2.8% after the firm said its performance in the
first nine months of the year was in line with full-year
expectations. Analysts at Credit Suisse said the release "strikes
an upbeat tone on the strategic transition, and the appointment of
a new marketing director (Peter Corjin from P&G) fills a key
gap in senior management."
Subscribe to WSJ: http://online.wsj.com?mod=djnwires