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European stocks flat, UBS shines

European stocks flat, UBS shines
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First Published: Tue, Jun 23 2009. 05 54 PM IST
Updated: Tue, Jun 23 2009. 05 54 PM IST
Frankfurt: European shares were flat on Tuesday, having briefly turned negative amid doubts about the timing of a return to economic growth, which sent stock markets in the United States and Japan sharply lower.
UBS shone, rising 3.1% after the New York Times reported the US Justice Department may drop a case aimed at forcing the Swiss bank to reveal the names of 52,000 wealthy American clients suspected of tax evasion.
At 3:35pm, the pan-European FTSEurofirst 300 index of top shares was down 0.1% at 836.68 points, having fallen as much as much as 0.7% earlier in the session.
The European benchmark index ended 2008 at 831.97 points
US stocks saw their worst one-day loss in two months on Monday and Tokyo stocks fell almost 3% on Tuesday.
“After the massive three-month rally that sent all major indexes significantly higher, we are now in the middle of the long-awaited pullback,” Close Brothers Seydler said in a note.
“Market participants start to realise that the recovery in the economy and earnings is unlikely to be as strong as the rise in stock prices since early March.”
Despite its recent drop, the European benchmark index is up around 30% from the record low set in early March.
“The pattern of the equity rally so far fits the traditional template of a sharp rise and a ‘stall´ period,” Goldman Sachs said in a research note.
“Q2 will be a contractionary quarter and the forward indicators do not suggest positive growth in the (United States, Europe and Japan) until Q3,” Goldman Sachs said.
Euro zone purchasing managers index (PMI) data on Tuesday showed that a recovery from the recession stalled in the services sector in June while manufacturing fared slightly better.
Insurers were weak, with AXA down 1.9% and ING Group falling 1.3%.
Shares in Anglo American fell 2.3% after the mining group rejected a merger proposal from rival Xstrata. Xstrata shares fell 1.3%.
Anglo American trimmed some early losses after dealers cited market talk of bid interest from China’s state-owned Chinalco. Both Chinalco representatives in London and officials from Anglo American declined to comment.
Utilities E.ON, up 1.3% and Iberdrola, up 1.5%, drew strength from a JPMorgan sector upgrade to “overweight” from “underweight”, citing “a likely pickup in power prices, a potential rebound in economic activity, improved valuations and a relatively benign network price regulation”.
The London-listed shares of Thomson Reuters Corp gained 5.4% on news that the data publishing and financial information group, which is also listed in New York, plans to withdraw its shares from the London Stock Exchange.
Also among the winners, mobile phone maker Nokia advanced 1.7% after Credit Suisse raised its target price for the stock to euro 14 from 12, citing in a note “increased confidence on margins”.
Eyes will also be on the US Federal Reserve central bank, whose Federal Open Market Committee (FOMC) begins its two-day meeting on interest rate policy.
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First Published: Tue, Jun 23 2009. 05 54 PM IST
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