By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- A late-session selloff pulled European
stock markets back from a 41/2 year high on Wednesday, after data
showed U.S. factory orders declined in January as investors awaited
central bank meetings and jobs data due later in the week.
The Stoxx Europe 600 index lost 0.3% to settle at 293.38, after
closing at its highest level since June 2008 on Tuesday.
In the U.S., stocks mostly built on recent gains, a day after
the Dow Jones Industrial Average (DJI) jumped 125.95 points, or
0.9% to 14,253.77, marking the highest closing level on record.
See: U.S. stocks open higher, extending record rise.
"The market levels right now are [quantitative easing] related.
It has helped push them higher, but how can you justify this?
Normally you hit all-time highs with booming economies and
everything looking rosy. But you don't have that right now and it
makes me a little nervous," said Richard Perry, chief market
strategist at Central Markets in London.
"QE money continues to push everything up and unless you get an
indication from the [U.S. Federal Reserve] that injections will be
withdrawn you got to stay with it," he added. "I'd like to think
that markets go up because of strong fundamentals and companies
performing well and I think the market needs a healthy
correction."
As a way of mitigating lackluster economies, central banks
around the world have implemented ultra-loose monetary policies,
including low interest rates and aggressive bond-buying programs by
the Fed, the Bank of England and the Bank of Japan.
Additionally, the European Central Bank last year pledged to do
whatever it takes to save the euro, which has helped send the Stoxx
600 up by around 25% from its 2012 low. On Thursday, both the ECB
and BOE meet for their monthly policy meetings.
Among individual stocks standing out in Wednesday's trade,
shares of Vodafone Group PLC (VOD) rallied 6.8% after Bloomberg
News late Tuesday reported that Verizon Communications Inc. (VZ) is
considering several options involving its relationship with the
U.K. telecom giant this year. The options range from ending the
wireless venture to a full merger.
Vodafone owns a 45% stake in the Verizon Wireless subsidiary,
while Verizon holds the rest. A representative from Vodafone
declined to comment. See: Vodafone up 5% on report Verizon mulling
options.
On a more downbeat note, Edenred dropped 4.5% as Nomura cut the
prepaid-services firm to reduce from neutral.
U.S. and euro-zone data in focus
For the broader European stock market, investors digested data
releases from both the euro zone and the U.S.
Orders for goods produced in U.S. factories fell 2.0% in
January, largely because of fewer orders for aircraft. See: U.S.
factory orders drop 2.0% in January.
Meanwhile, Automatic Data Processing Inc. said private-sector
employment growth in the U.S. slowed down in February, but still
beat expectations. See: ADP: U.S. adds 198,000 private-sector jobs
in Feb.
"The ADP number today was better than expected and can work as a
loose indicator for the nonfarm-payrolls data on Friday. But from
what I gather you have to be above 200,000 jobs to be positive on
the economy, so it's still not a major positive," said Perry from
Central Markets.
Analysts polled by MarketWatch forecast that Friday's data will
show 160,000 jobs were added to the economy in February, with an
unemployment rate of 7.9%. .
In Europe, the second estimate for gross domestic product for
the euro zone confirmed a 0.6% contraction for the final three
months of 2012, with Spain, Italy and France contributing to the
decline. Additionally, trade data for the currency bloc showed both
imports and exports dropped 0.9% in the fourth quarter.
Movers
Germany's DAX 30 index posted one of the few gains among
country-specific indexes, up 0.6% to 7,919.33, as some of the
benchmark's heavier components moved higher.
Shares of Henkel AG & Co. KgaA climbed 2.4%, as the
home-chemicals maker said its 2012 targets were fully achieved.
Sales rose 5.8% and adjusted operating profit improved 15.1%.
Shares of major chemicals firm BASF SE gained 0.6%. The company
said is has agreed with Royal Dutch Shell PLC (RDSB) to supply
fluid catalytic cracking catalysts to Shell's global refining
network.
Oil firms also nudged higher, shrugging off softer oil prices.
Late on Tuesday, April oil futures (CLJ3) drifted lower on news
Venezuelan President Hugo Chávez had died after fighting cancer.
See: Why oil prices dipped on Chavez's death.
Shares of Total SA (TOT) gained 0.2% in Paris, BP PLC (BP) added
0.6% in London and ENI SpA advanced 0.4% in Milan.
The CAC 40 index , however, closed 0.4% lower at 3,773.76, with
banking shares on the decline. BNP Paribas SA fell 1.6%.
The U.K.'s FTSE 100 index dropped 0.1% to 6,427.64. See: Global
stock markets far from Dow euphoria.
Shares of Imperial Tobacco Group PLC (ITYBY) lost 2.4%, on the
back of an article in the Guardian saying the U.K. government will
introduce plain-packaging laws for cigarette packets later this
year. See: U.K. plain-packaging support bruises tobacco firms.
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