By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets struggled for
direction on Monday, as investors were hesitant of placing any big
positions ahead of potentially market-moving events later in the
week, including central-bank meetings and top-tier U.S. data.
The Stoxx Europe 600 index inched 0.1% higher to close at
299.06, after swinging between gains and losses earlier in the
day.
"It's an interesting thing -- markets continue to open fairly
positive and then fall off daily highs. They have been struggling
to push forward [in recent days] and last week there was no real
data to guide the markets. It gave investors a chance to pause for
breath and we're seeing a bit of that today as well," said Richard
Perry, chief market strategist at Central Markets.
He added that investors probably opted to stay on sidelines
ahead of a week with several event risks. The European Central
Bank, the Bank of England and the U.S. Federal Open Market
Committee meet during the week, with market participants closely
watching for any hints of changes in monetary policy.
On Wednesday, the U.S. gross-domestic-product report is out,
followed on Friday by the nonfarm-payrolls data and unemployment
rate. Investors have closely been watching data out of the U.S.
lately after Fed Chairman Ben Bernanke said the central bank could
start reducing its $85-billion-a-month asset purchases if the
economy improves as expected.
"Basically anything big that can be announced will be announced
stateside this week and there's a lot of talk about how the market
will be looking towards [Fed] tapering and what expectations will
be after the data," Perry said.
"Bernanke has said it's all data dependent. We're looking at
September as the start of tapering but anything worse than
expectations could impact the timing. Bad news is good news in that
sense," he added.
U.S. stocks were mostly lower on Monday, weighed by data showing
pending home sales fell in June.
Europe movers
Back in Europe, Germany's DAX 30 index rose 0.2% to 8,259.03,
while the U.K.'s FTSE 100 index closed 0.1% higher at 6,560.25.
France's CAC 40 index closed almost flat at 3,968.91.
Among notable movers, shares of Elan Corp. PLC (ELN) jumped 3.7%
after health-care products group Perrigo Co. (PRGO) said it would
buy the Irish biotech firm in a deal valued at $8.6 billion. Shares
of Perrigo traded 6.2% lower in U.S. trade at the time of the
European close.
Advertising firms were also in the spotlight after Publicis
Groupe SA and Omnicom Group Inc. (OMC) on Sunday announced they
will merge in the industry's biggest deal ever. The new firm,
Publicis Omnicom Group, will have a combined market capitalization
of $35.1 billion, overtaking current market leader WPP PLC .
Shares of Publicis picked up 0.1% in Paris and Omnicom gained
0.5%.
Other advertising firms also advanced as analysts predicted they
would benefit from potential client conflicts at the new merged
company. Goldman Sachs mentioned Havas SA , up 4.7%, and WPP, up
0.6% as rival players likely to gain from the merger. Additionally,
UBS lifted WPP to buy from neutral following the announcement.
Shares of Danone climbed 3.2% after the yogurt maker confirmed
its full-year targets and reported a 6.7% rise in quarterly
sales.
Also on the rise, shares of Volkswagen AG picked up 1% after
Berenberg initiated coverage of the car maker with a buy
rating.
Shares of Essilor International SA rallied 6.2% after the
contact-lenses firm said it would acquire the 49% stake in
Transitions Optical Inc. it doesn't already own as part of a growth
strategy. Essilor also said it would buy a 100% stake in Intercast
Europe SpA.
Bucking the positive trend in Europe, Italians banks showed
broad-based losses after Fitch Ratings late on Friday downgraded
several of the country's mid-sized banks. Banca Popolare
dell'Emilia Romagna Scarl , down 5.3%, was cut to BB+ from BBB and
Banca Carige SpA , off 2.8%, was lowered to BB from BB+.
Credit Agricole SA lost 1.4% after J.P. Morgan Cazenove cut the
French bank to neutral from overweight.
Barclays PLC (BCS) gave up 3.5% after speculation the bank will
boost its capital levels by issuing new securities. The bank said
in a statement it has been in discussions with the Prudential
Regulation Authority regarding its financial and capital management
plans and will update the market alongside its interim results on
Tuesday.
Shares of TNT Express NV slumped 4.6% after the courier firm
said it swung to a loss in the second quarter amid continuing
challenging tough trading conditions in Europe.
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