By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Oil firms led European stocks higher on
Tuesday, as oil prices topped $97 a barrel for the first time since
mid-September, while encouraging German consumer-confidence data
and solid U.S. earnings reports also lifted sentiment.
The Stoxx Europe 600 index added 0.3% to close at 290.30 after
snapping a three-day winning streak on Monday.
"The markets have had a good run for a couple of months, but I
think the euro area still has more problems. Markets need to
remember that a lot of the euro-area countries are in recession and
that will have an impact on company earnings," said John Redwood,
chief of the investment committee at Evercore Pan-Asset.
"Some countries have done a good job of meeting requirements,
but there are still large deficits and it's difficult to get the
economies growing again. It makes sense to pause after this rally,"
he said.
Shares of Royal Philips Electronics NV (PHG) posted one of the
biggest gains in the pan-European index, up, 2.3%, after the Dutch
firm said it expects sales to pick up in the second half of the
year.
William Hill PLC picked up 2.1%, after the online-betting site
said operating profit for the 14 weeks to Jan. 1 grew by 20%.
Pointing in the other direction, shares of Sandvik AB lost 0.7%.
The Swedish engineering group reported fourth-quarter profit, which
was slightly lower than a year ago, and said production rates
declined in a reflection of weaker demand.
Shares of Sanofi SA (SNY) lost 0.8% as Barclays cut the French
drug maker to equal weight from overweight. The bank also
downgraded Germany's Bayer AG to underweight from equal weight,
sending its shares 2.8% lower.
GlaxoSmithKline PLC (GSK), up 1.6%, was lifted to overweight
from equal weight.
Fed meeting under way
Elsewhere, European stock markets were broadly upbeat, erasing
earlier losses as investors took inspiration from Wall Street,
where better-than-expected earnings reports from Pfizer Inc. (PFE)
and Valero Energy Corp. (VLO) gave way for optimism.
U.S. stocks traded in positive territory Tuesday, ahead of a
two-day Federal Reserve meeting.
The central bank is expected to keep monetary policy ultra loose
in efforts to boost the labor market and economy. A statement is
expected at the conclusion of the meeting on Wednesday.
On the data front in the U.S., the S&P/Case-Shiller 20-city
composite showed home prices declined in November on seasonal
weakness.
Separately, a gauge of consumer confidence fell to the lowest
level in more than a year in January.
Closer to home, data from Germany showed consumers became more
confident at the start of 2013. The GfK consumer-climate study
improved to a 5.8-points forecast for February, up from 5.7 points
in January and better than expected by analysts.
The German DAX 30 index rose 0.2% to 7,848.57, with shares of
ThyssenKrupp AG up 2.7%.
Outside the main index in Frankfurt, shares of Software AG sank
17%, after the IT firm said 2012 revenue and earnings before
interest and taxes declined compared with a year earlier.
In France, the CAC 40 index inched 0.1% higher to 3,785.82, even
as shares of Credit Agricole SA slumped 2.7%, Société Générale SA
dropped 1.4% and BNP Paribas SA lost 0.9%.
Shares of oil group Total SA (TOT) gained 1.6%, as oil prices
climbed above $97 a barrel.
Oil firms were also on the rise in the U.K., with shares of BP
PLC (BP) and Royal Dutch Shell PLC both up 1.5%.
Shares of Royal Bank of Scotland Group PLC (RBS) slumped 6%
after The Wall Street Journal reported that U.S. authorities want
the bank to face criminal charges over allegations of rigging
interest rates.
An RBS spokesman said, "discussions with various authorities in
relation to Libor setting are ongoing. We continue to cooperate
fully with their investigations."
The FTSE 100 index closed 0.7% higher at 6,339.19.
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