By Dow Jones Business News,
January 14, 2014, 12:03:00 PM EDT
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets erased earlier losses in afternoon trade on Tuesday, tracking gains in
the U.S. where better-than-expected retail sales and bank earnings helped lift the mood.
The Stoxx Europe 600 index added 0.2% to 331.23, after trading as low as 327.34 earlier in the day.
"If you look at the news coming out of the U.S., the retail sales were slightly better than expected and I think that
has given markets a bit of a lift," said Peter Dixon, strategist at Commerzbank in London.
"We also had the J.P. Morgan numbers, which were ahead of expectations and Wells Fargo was also good," he added. "
Obviously the U.S. consumers matter for the European economy and the banking numbers are a benchmark for the European
banks to a degree and something European investors will be looking at."
Among the biggest movers in the pan-European index, shares of Celesio AG slumped 4.4% after drug-distribution giant
McKesson Corp. ( MCK ) said late Monday that plans to take over the German firm fell through.
Shares of Volkswagen AG dropped 2.4% after UBS cut the German car maker to sell from neutral.
On a more upbeat note, shares of British Sky Broadcasting Group PLC picked up 3.8% after UBS lifted the cable-TV
provider to buy from neutral.
More broadly, European investors took a clue from the trading mood on Wall Street, where markets rallied as investors
welcomed the better-than-expected retail sales for December.
The gains followed sharp losses on Monday, when the Dow Jones Industrial Average (DJI) suffered the worst one-day drop
since Sept. 20. The heavy selling came after Atlanta Federal Reserve President Dennis Lockhart said he supports "similar
tapering steps" to the one taken to reduce bond-market purchases by $10 billion by the Federal Reserve last month, as
long as the economy grows at the 2.5% to 3% clip he's forecasting this year.
Back in Europe, data showed industrial production in the euro zone rose at the fastest pace in three and a half years
in November, beating economists' expectations.
In the U.K., the Office for National Statistics said inflation fell to 2% in December, reaching the Bank of England's
target for the first time since November 2009.
"Although that is well above euro-zone and U.S. inflation, higher sterling and still-weak wage growth should drive
inflation lower through this year to a little, not a lot, below target. That will help return real wages to growth and
move the recovery onto a more sustainable footing," said Rob Wood, chief U.K. economist at Berenberg, in a note.
The U.K.'sFTSE 100 index rose 0.1% to 6,766.86. France's CAC 40 index added 0.3% to 4,274.20, and Germany's DAX 30
index moved up 0.3% to 9,540.51.
Shares of Suedzucker AG fell 4.1% in Germany, pulling back after an 11% rally seen on Monday, when the sugar producer
backed its fiscal-year outlook.
Shares of potash maker K+S AG rallied 4.9% after peer firm Uralkali said potash production rose 10% last year.
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