European stock markets end mostly lower
Fitch cuts Portugal’s debt rating to junk status
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — A pan-European stock index ended marginally lower on Thursday, falling for a sixth consecutive trading session after comments from euro-zone leaders disappointed investors.
The Stoxx Europe 600 index XX:SXXP -0.15% fell 0.2% to end at 219.98. It has dropped 5.3% so far this week.
U.S. markets were closed on Thursday for the Thanksgiving Day holiday.
Most European markets turned lower after French President Nicolas Sarkozy told reporters after a meeting with German Chancellor Angela Merkel and Italian Prime Minister Mario Monti that they respect the independence of the European Central Bank and won’t make demands on the institution as they try to tackle the sovereign debt crisis.
Euro zone running out of time
Time is running out for a solution to the euro-zone crisis. Simon Nixon says that the sovereign bond market is dead and that only a euro-zone-wide solution will reassure investors.
Merkel again criticized calls for the issuance of euro bonds, saying that common interest rates for all euro-zone borrowers would send the “wrong signal.”
“The market had too high hopes going into the scheduled meeting of Sarkozy, Monti and Merkel,” said Steen Jakobsen, chief economist at Saxo Bank. “France is not in any position to put pressure on Merkel. The single biggest thing Sarkozy needs to do is not put pressure on [France’s] AAA rating ahead of the election.”
Earlier, European markets had gained after the Ifo Institute reported that its November index of German business confidence rose to 106.6 from 106.4 in October, compared to expectations for a fall to 105.1.
The German DAX 30 index DX:DAX -0.54% closed down 0.5% to 5,428.11. The index fell 1.4% on Wednesday after Germany saw poor demand for its 10-year bonds at an auction.
Portugal downgraded
In Lisbon, the PSI 20 index PT:PSI20 -0.85% fell 0.9% to 5,185.10, with Banco Comercial Portugues PT:MBC -9.42% down 9.4%.
The losses came after Fitch Ratings downgraded Portugal’s sovereign credit rating to junk status, and assigned it a negative outlook. Trade unions in Portugal, meanwhile, were staging a 24-hour strike to protest government austerity measures.
The French CAC 40 index FR:PX1 -0.0064% finished virtually unchanged at 2,822.25. Among banks, BNP Paribas SA FR:BNP +3.31% gained 3.3% and Societe Generale SA FR:GLE +3.02% rose 3%.
Shares of Vallourec SA FR:VK +6.01% rose 6% after the French steel- tube maker was lifted to overweight from equalweight at Morgan Stanley.
In other Paris trade outside the CAC 40, shares of Arkema SA FR:AKE +6.54% rose 6.5% after the French-based chemicals group was upgraded to overweight from neutral at J.P. Morgan Cazenove, following news the group will sell its vinyls unit, which the broker said removes a “major negative influence” on the valuation.
Also in Paris, Air France-KLM FR:AF +10.03% shares surged 10% after Societe Generale lifted its rating on the airline to hold from sell.
In Brussels, shares of Belgian-Franco lender Dexia BE:DEXB +27.88% surged nearly 28%, although they remain down 86% year-to-date.
A newspaper reported on Wednesday that Belgian officials were seeking to renegotiate a bailout deal for the bank, which is being broken up, with the aim of getting France to take on a bigger share of the burden.
French and Belgian officials are readying guarantees for the lender that will be ready within a few days, reported Bloomberg News on Thursday, quoting a French official.
Meanwhile, Reuters reported that the situation has gotten so bad for the lender that it’s using emerging liquidity facilities in Belgium, France, Spain and Italy.
A spokesperson from Dexia declined to comment on the Reuters report but pointed to the bank’s Nov. 9 statement that it has increased its take of central-bank liquidity.
Shares of Austrian-based Raiffeisen Bank International DE:RAW +6.52% RAIFF -3.72% rose nearly 6%. The Eastern Europe-focused lender reported a 58% drop in third-quarter consolidated profit to €130 million ($174 million). However, the result was higher than the average estimate of €99 million in a Bloomberg survey of analysts.
The U.K.’s FTSE 100 index UK:UKX -0.24% fell 0.2% to end at 5,127.57, dropping for a ninth consecutive trading day. In the oil sector, BP PLC BP -0.20% UK:BP -1.37% fell 1.4% and Royal Dutch Shell PLC RDS.A +0.43% UK:RDSA -1.69% dropped 1.7%.
On the positive side, most U.K. banking shares posted gains. Royal Bank of Scotland Group PLC RBS +1.37% UK:RBS +3.63% rose 3.6% and Barclays PLC BCS -3.85% UK:BARC +3.11% gained 3.1%.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
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