Global economy worries keep lid on European stocks

By Barbara Kollmeyer, MarketWatch

LONDON (MarketWatch) — European stocks ended virtually flat on Thursday, trimming losses as Wall Street turned up but unable to fully shake off downbeat reports on China’s manufacturing sector and business activity in the euro zone.

The Stoxx Europe 600 index

/quotes/zigman/2380150/realtime XX:SXXP
-0.05%

shed 0.16 point, or 0.1%, at 334.78, after trading as low as 331.28 in earlier activity. The index pared losses in afternoon action, after U.S. stocks turned higher.

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Among individual stocks, BAE Systems PLC

/quotes/zigman/213625/realtime UK:BA
-8.33%

/quotes/zigman/259559/delayed/quotes/nls/baesy BAESY
-7.66%

slumped 8.3% after the company posted a fall in 2013 net profit and guided lower for 2014 earnings.

Randstad Holdings NV

/quotes/zigman/182357/realtime NL:RAND
-10.52%

tumbled 10.5%. The Dutch staffing group said it swung to a profit in the fourth quarter of 2013 and revenue rose 1%, and that it expects a gradual recovery to continue.

Shares of packaging company Rexam PLC

/quotes/zigman/13920911/realtime UK:REX
-1.81%

fell 1.8% after posting a rise in full-year earnings as it won back North American market share, but also saw weakness in Western Europe and South America.

Aegon NV

/quotes/zigman/416860/realtime NL:AGN
-6.00%

slidl 6% after the Dutch insurer posted a 60% slide in net profit owing to hedging losses.

On the upside, shares of Technip SA

/quotes/zigman/141443/realtime FR:TEC
+9.02%

leapt 9% after the French oil-services company said it expects an operating margin at its key subsea unit of 12% in 2014, down from 13.5% in 2013. The company’s board approved a 10% dividend increase.

Setting the stage for European stocks, Asia markets
suffered losses across the board after sluggish trade data out of Japan and a contraction in China’s manufacturing sector to a seven-month low, based on a preliminary HSBC/Markit “flash” version of its purchasing managers index.

Though analysts said the data may not represent the full picture for Chinese factories, it nonetheless added to gloom triggered by Wednesday’s Fed minutes that showed some members calling for a rise in rise in short-term interest rates as early as mid-2015.

Bloomberg

In Europe, Markit data showed business activity in the euro zone lost momentum, owing to weakness in France, the region’s second-largest economy. The monthly gauge of activity across the manufacturing and services sectors of the 18-nation euro zone, fell to 52.7 in February from 52.9 the previous month.

French consumer prices posted a record fall in January, retreating 0.6% from December, which was more than expected from analysts polled by The Wall Street Journal.

The downbeat data could add more pressure on the European Central Bank to lower interest rates or launch nonconventional easing measures. Analysts at Danske Bank forecast that more monetary easing could come as soon as the March meeting, when the ECB staff forecasts are published, or in April when data are expected to show inflation has dropped further.

“In our view, the communication from ECB members suggest that the discussion is not about whether to ease again, but on which instrument to use,” Pernille Bomholdt Nielsen said in a note.

Regional indexes were mixed. The French CAC 40

/quotes/zigman/3173214/realtime FR:PX1
+0.33%

gained 0.3% to close at 4,3455.49. Heavyweight Danone SA

/quotes/zigman/163487/realtime FR:BN
+1.45%

rose 1.5%. The company said sales growth would be steady this year as it posted a fall in net profit and operating profit also fell. Veolia Environnement SA

/quotes/zigman/262847/realtime FR:VIE
+3.13%

shares climbed 3.1% after announcing a €500 million ($685 million) contract to handle waste management in Buenos Aires.

The German DAX 30 index

/quotes/zigman/2380246/realtime DX:DAX
-0.43%

fell 0.4% to settle at 9,618.85, with Bayer AG

/quotes/zigman/560388/realtime DE:BAYN
-0.18%

off 0.7% and BASF SE

/quotes/zigman/601736/realtime DE:BAS
-0.22%

down 0.6%.