By Dow Jones Business News,
December 11, 2013, 11:54:00 AM EDT
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stocks declined on Wednesday as investors mulled a U.S. budget deal that strengthened
the case for the Federal Reserve to taper its bond-buying program.
The Stoxx Europe 600 index dropped 0.5% to close at 313.30, extending losses into a second straight day.
Among notable movers in the index, shares of FirstGroup PLC rose 4.8% after the U.K. rail company said it was against
a shareholder plan to split the company. Sandell Asset Management has approached FirstGroup about separating the group
and disposing of assets, the company said in a statement.
Ratings changes moved the needle on some shares, such as Natixis , up 3.1% after it was reportedly upgraded to
outperform from neutral by Exane BNP Paribas. Vivendi SA rose 2.9% after Bernstein reportedly lifted it to outperform
from market perform.
Imagination Technologies Group PLC shares sank nearly 24% after half-year sales fell short of analyst expectations.
Shares of Royal Bank of Scotland Group ( RBS ) fell 2.9% after the bank said Nathan Bostock, group finance director,
will step down.
"The theme is still low-volume down days and aggressive buying. Buy-side volume is much higher than thin selling,"
said Atif Latif, director of trading at Guardian Stockbrokers, in emailed comments.
He said comments from European Central Bank Vice President Vitor Constancio underpinned sentiment. Constancio
reportedly said there was no shortage of ECB-eligible collateral in any euro-zone nation, meaning banks can boost
funding without problems if needed.
In economic news, German consumer prices rose slightly, but inflation was overall contained.
In Washington, House and Senate negotiators announced a budget deal on Tuesday evening.
"Confirmation that a budget deal has been negotiated is a real step in the right direction, but the deal, if confirmed
by both the House and Senate, would certainly have the potential to bring forward the prospect of tapering" and weigh on
stocks, said Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor, in a note to investors.
Tapering refers to a potential move by the Federal Reserve to scale back its bond-buying program.
The French CAC 40 slipped 0.1% to 4,086.86.
Shares of European Aeronautic Defence & Space NV rallied 7.5% in Paris after the company reaffirmed a return on sales
of 10% by 2015, excluding one-off items and costs linked to the ramp-up of its wide-bodied A350 airliner.
The German DAX 30 index dropped 0.4% to 9,077.11. The FTSE 100 index fell 0.2% to 6,507.72. Mining stocks were
lower, with Randgold Resources Ltd. down 2.2% and BHP Billiton PLC ( BHP ) off 1.2%.
Italian stocks fell even as Prime Minister Enrico Letta won a confidence vote in the lower house as expected. Italy's
FTSE MIB index slid 1.4% to 17,973.96.
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