By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks showed little change on
Thursday, bogged down by bank-related losses in London and a big
drop for heavyweight Hennes & Mauritz AB on an earnings
disappointment.
The Stoxx Europe 600 index edged up by 0.47 point, or less than
0.1%, to close at 331.40. The benchmark was held back in part by
losses among U.K. equities.
The muted action by European stocks came alongside U.S. equities
dipping in and out of negative territory. In U.S. economic news,
the government upgraded fourth-quarter economic growth to 2.6% from
2.4%, largely on the back of higher spending on health care. At the
same time, an increase in business investment was lower than
previously estimated.
The finance sector was in focus after the U.S. Federal Reserve
on Wednesday rejected the capital plans for the U.S. arms of
British multinational HSBC Holding PLC , Spain's Santander and
Royal Bank of Scotland Group . The Fed also nixed Citigroup Inc.'s
(C) plan, saying the firm didn't make sufficient progress in
improving risk-management and control practices.
In London, shares of HSBC shed 0.5%, and Royal Bank of Scotland
shares fell 1.4%. Santander shook off the news, rising 0.7%.
Another big mover was H&M , dropping 4.3% after one of
Europe's biggest retailers posted a 7.8% rise in profit, but warned
costs in 2014 will rise as it pushes ahead on its online stores,
which includes a launch in China at the end of the year.
Regional equities had opened lower, in reaction to late selling
Wednesday on Wall Street after U.S. President Barack Obama urged
European leaders to join the U.S. in a unified response against
Russia over its annexation of the Ukrainian breakaway region of
Crimea. While much of Europe pared those losses back to a moderate
fall, Russia's Micex index fell 1.2% on Thursday.
Stephen Pope, managing partner at Spotlight Ideas, said in
emailed comments that he remains positive on the outlook for
large-cap European equities. Their ability to generate revenue on a
global basis "provides a healthy immunization from any potential
European downturn if the tension with Russia were to become more
serious."
"The running undercurrent is that the ECB will seek additional
ways to boost the economy, and try and finesse a way to bring about
a fall in the euro," said Pope.
Traders have spent much of the week discussing the potential for
monetary easing to stave off deflation by the European Central Bank
at its next meeting, after officials earlier in the week signaled
the central bank would consider negative deposit rates and moving
toward quantitative easing. The euro (EURUSD) was down about 0.2%
against the dollar.
The International Monetary Fund on Thursday said it reached a
deal to provide up to $18 billion to Ukraine as part of an economic
reform program for the country. Changes required for the aid
package may be "painful," Ukraine's central bank chief Stepan Kubiv
reportedly said.
In France, a survey showed growth in consumer confidence in
March. Insee, the national statistics agency, said the index rose
to 88, from 85 in February, returning to a level seen in July 2012.
France's CAC 40 narrowed its decline after the data, but still
closed down 0.1% to 4,379.06. Alstom SA was a big loser after
Bloomberg reported that the U.S. Justice Department is building a
bribery case against the multinational, citing sources.
The company's lawyer Robert Luskin at Patton Boggs LLP, told
Bloomberg the company is cooperating with prosecutors.
Germany's DAX 30 finished roughly flat at 9,451.21.
The U.K.'s FTSE 100 fell 0.3% to close at 6,588.32, held back in
part by declines among miners and banks. Meanwhile, the U.K.
regulator overseeing the electricity and gas markets called for an
investigation of providers over concerns about stalled
competition.
Outside of equities, the British pound (GBPUSD) jumped above
$1.66 against the U.S. dollar after February retail-sales figures
beat analyst expectations.
More news from MarketWatch:
Schwab says survey finds retail investors grow more bearish
Dr. Copper is waving a red flag
Subscribe to WSJ: http://online.wsj.com?mod=djnwires