By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets extended losses
into a third straight day on Tuesday, as concerns about global
growth remained in the spotlight after Germany's ZEW index missed
expectations.
Most markets, however, briefly trimmed declines in afternoon
action, as upbeat earnings results from Goldman Sachs Group Inc.
(GS) boosted shares of investment banks in Europe and U.S.
construction data beat expectations.
The Stoxx Europe 600 index dropped 0.8% to close at 288.16,
adding to a 0.7% loss from Monday, when markets tumbled globally as
gold prices sank to a two-year low. Read: 6 reasons for gold's
massive selloff: HSBC
The Stoxx's closing price marked the lowest level in a week, as
worries over a slowdown in global growth resurfaced after a string
of disappointing U.S. and Chinese data recently. The pan-European
index was still holding a 3% year-to-date gain after cheap central
bank liquidity boosted markets in the beginning of the year.
On Tuesday, drug makers were among heaviest decliners, dropping
after being among few sectors on rise amid Monday's selloff. Shares
of GlaxoSmithKline PLC (GSK) dropped 1.9%, Novartis AG (NVS) lost
1.7% and Roche Holding AG shaved off 1.2%.
On a more upbeat note, major financial institutions put in
notable performances after investment-bank heavyweight Goldman
Sachs reported first-quarter profit that topped expectations.
Shares of ING Groep NV (ING) gained 2.3%, UBS AG (UBS) rose 0.6%
and Credit Suisse Group AG (CS) added 0.7%.
"Given that earnings remain robust and forward-looking guidance
encouraging, we see nothing more than the market remaining in the
lower range of the uptrend," said Atif Latif, director of trading
at Guardian Stockbrokers.
Other news from the U.S. briefly helped European stock markets
trim losses, as data showed housing starts in March rose 7% to a
seasonally adjusted annual rate of 1.04 million, the highest rate
since June 2008.
Additionally, industrial production rose a
stronger-than-expected 0.4% in March.
U.S. stocks traded higher on Wall Street, rebounding from the
worst performance in five months seen on Monday, when gold prices
slumped the most since the early 1980s.
German ZEW
European stock markets spent the trading day mired in red as the
German ZEW economic sentiment indicator fell to a
lower-than-expected 36.3 level in April from 46.5 a month earlier.
The index, which measures investors' expectations for the coming
six months, was forecast to fall to 43.0.
Germany's DAX 30 index closed 0.4% lower at 7,682.58.
The disappointing report added to worries over recent
macroeconomic data pointing to a slowdown in the global economic
recovery. On Monday, China posted first-quarter
gross-domestic-product growth below expectations and the New York
Fed's Empire State index fell to the slowest reading since
January.
Asia stocks closed lower on Tuesday.
Back in Europe, mining firms moved higher, rebounding after a
broad-based selloff the previous day triggered by the weak Chinese
data and large declines in metals prices. Fresnillo PLC gained 7.5%
and Eurasian Natural Resources Corp. added 3.7%. Metals prices were
mostly higher.
Shares of Glencore International PLC (GLCNF) gained 1.3% and
Xstrata PLC gained 2%, after Chinese authorities cleared a merger
between the two mining firms.
"The sell off from yesterday was overdone on the back of
aggressive gold selling and positive news from Xstrata/Glencore has
helped money flow back into risk," Latif from Guardian Stockbrokers
said.
"Valuations still remain at the lower end of historical ranges
and we are encouraged by buy-side volume on down days that continue
to push the market higher," he added.
The U.K.'s FTSE 100 index, however, declined 0.6% to 6,304.58,
pressured by Associated British Foods PLC losing 1.8%, after Credit
Suisse cut the firm to neutral from outperform.
Among other major decliners, shares of LVMH Moët Hennessy Louis
Vuitton dropped 3.8% in Paris, after the luxury retailer posted
sluggish sales growth at its main fashion and leather goods
businesses.
Shares of oil group Total SA (TOT) lost 1%, as oil prices
slipped to the lowest level since December.
On a more upbeat note in France, Danone SA climbed 2.2%, as the
yogurt maker said sales in the Asia-Pacific, Latin America, Middle
East and Africa regions offset weakness in the European market.
France's CAC 40 index slid 0.7% to 3,685.79.
Outside the major indexes, Akzo Nobel NV climbed 1.9%, after ING
lifted the paints and coatings firm to buy from hold, citing the
potential for "perfect tailwinds" in 2013 and 2014 to bring
positive earnings surprises.
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