By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stocks posted a fourth straight
week of losses on Friday, after a volatile trading weak with
investors remaining cautious ahead of the U.S. Federal Reserve's
policy-setting meeting next week.
The Stoxx Europe 600 index added 0.2% to close at 291.13, partly
rebounding after four days stuck in the red.
The index closed 1.5% lower on the week, with investors worrying
a reduction in central liquidity will bring financial markets to
their knees. In May, the pan-European index had climbed to a
multiyear high, boosted by aggressive easing from central banks,
but comments from U.S. Federal Reserve Chairman Ben Bernanke about
a potential tapering of quantitative easing sparked a
correction.
"The market is in a correction phase at the moment and as a
result we're seeing some erratic movements in both directions,"
said Joe Neighbour, trading analyst at Central Markets.
"It could last for a number of days or a number of weeks. We've
reduced action the last few days to wait and see what will play
out. The Fed meeting next week is quite pivotal," he added. "I
think the Fed will have taken note of the way the market has
reacted, so we're not expecting any drastic action [from the Fed]
any time soon."
Among major movers in Europe on Friday, Elan Corp. PLC surged
8.4% after the biotech firm said it is proceeding with a formal
sale process after recent interest. The company, however, urged
shareholders not to tended into the current offer from Royal
Pharma.
Shares of Renault SA put on 1.2% after Citigroup added the car
maker to its focus list.
Shares of Glencore Xstrata PLC (GLCNF) gained 3.2% after the
mining and commodities trading firm signed a $17.3 billion
revolving credit deal, which replaces the previous revolving credit
facilities of both Glencore and Xstrata.
U.S. data
For the broader European market, investors looked to the U.S. to
gauge if fresh data could strengthen or weaken the case for
continued easing from the Fed, ahead of its policy-setting meeting
next week.
The data showed industrial production was unchanged in May,
missing analyst expectations of a 0.1% gain. Meanwhile, the
preliminary June reading of the University of Michigan and Thomson
Reuters consumer-sentiment index fell to 82.7 from a final May
reading of 84.5.
"We really want to see things pushing up, so I would say that
this is not great and probably suggests that QE will stick around a
little longer," said Neighbour from Central Markets.
Bernanke has said the central bank could begin tapering its bond
purchases in coming months if data continue to improve, stoking
fears of a withdrawal of the $85-billion-a-month liquidity
injection and leaving investors closely monitoring U.S. data
releases.
The anxiety over a reduction in the QE program has also pushed
up a wide range of interest rates. A report in The Wall Street
Journal calmed nerves on Friday, however, saying that Bernanke is
likely to reiterate that he expects a considerable amount of time
to pass between ending the bond-buying program and raising
short-term rates. The report also hinted that the Fed won't end its
asset purchases all at once.
U.S. stocks traded lower on Wall Street.
On the data front in Europe, a report showed the number of
people employed in the euro area dropped 0.5% in the first quarter
of 2013 to the lowest level in more than seven years. Employment in
Greece fell 2.3%, Portugal dropped 2.2% and Spain and Cyprus both
saw a 1.3% drop in employment.
Among notable movers on Friday, shares of Hochtief AG jumped
5.9% after the construction-services firm said late Thursday it
will buy back up to 4.3 million of its own shares up to a price of
260 million euros ($346.9 million).
Shares of Yara International PLC gained 1.2% in Oslo after the
fertilizer firm said it is postponing a planned expansion of a
plant in Belle Plaine, Canada.
For the major country-specific indexes, Germany's DAX 30 index
picked up 0.4% to 8,127.96, but lost 1.5% on the week.
France's CAC 40 index rose 0.2% to 3,805.16. On the week, the
index lost 1.7%.
The U.K.'s FTSE 100 index inched 0.1% higher to 6,308.26,
trimming its weekly loss to 1.6%.
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