LONDON (MarketWatch) — European bourses closed lower Friday as oil prices rose again, returning investors’ attention to the volatile situation in the Mideast and North Africa.
Traders also digested a weaker-than-expected U.S. jobs report.
The Stoxx Europe 600 index (STOXX600) spent the morning in the green, hitting an intraday high of 285.4, but turned decidedly lower after the release of U.S. nonfarm payrolls. It closed down 0.6% at 281.9, bringing weekly losses to 0.8%.
Top losers on the European benchmark included French retail giant Carrefour SA (CA), which slumped 4.4% after a Citigroup downgrade to sell from neutral. The broker warned that the proposed spinoffs of the group’s Dia hard-discount unit and property business would lead to €1.1 billion ($1.54 billion) of direct value loss.
French electronics company Legrand SA (LR) sank more than 5% after funds managed by private equity firms Kohlberg Kravis Roberts & Co.
KKR,
European stocks turned lower Friday after data showed the U.S. economy added 192,000 jobs in February. Though it was a solid number, it fell short of the 218,000 increase that economists surveyed by MarketWatch had forecast. A string of upbeat U.S. economic data had fueled hope that the jobs report would be exceptionally strong. Read more about the U.S. nonfarm payrolls
“Anticipation of a strong jobs number is what drove the markets yesterday, it wasn’t going to do it again today,” said Bernard McAlinden, strategist at NCB Stockbrokers.
Still, he is optimistic for the medium term, saying that despite the growing risk from the unrest in the Middle East and North Africa, markets are likely to keep pushing higher. The biggest threat to the rally remains rising commodity prices.
“A bull market is always interrupted by geopolitical crises and commodity price rises. The drive is still to go higher at this point in the cycle but with more scope for a slowdown when interest rates start going up. The sweet spot can’t last forever,” he added.
As the deadlock in Libya continued Friday, oil prices resumed their relentless march higher. Light sweet crude oil traded on the New York Mercantile Exchange rose $1.64 to $103.58 a barrel.
Losses on the Stoxx 600 were cushioned by oil-services companies.
Dutch-listed maritime oil and gas engineer SBM Offshore (SBMO) rose 6.3% after it delivered a better-than-expected increase in operating profit in 2010. Peers Petrofac (PFC) and Technip SA (TEC) rose 3.2% and 1.3%, respectively.
In the insurance sector, Standard Life (SL.) gained 2.9% and Swiss Life Holding (SLHN) rose 1.9%.
In France, the CAC 40 index (PX1) lost 1% to 4,020.21, weighed down by a decline in defensive utility stocks like Veolia Environnement SA (VIE) and GDF Suez SA (GSZ). Both fell more than 2.5%. Veolia posted flat annual profit and said it would accelerate divestments in the medium term.
Some deal news also moved shares in Paris Friday. Credit Agricole SA (ACA) declined 1% after agreeing to buy Belgian bank unit Centea from financial-services group KBC (KBC) for €527 million. KBC, which has received billions of euros in state aid to help it weather the financial crisis, was required to sell the unit by European Union regulators. The deal will significantly boost Credit Agricole’s position in Belgium. KBC shares rose 2.7%.
In French trading, Hermes International (RMS) advanced 0.4% after the luxury-goods group posted a 46% jump in 2010 profit, helped by strong momentum in China.
In Germany, the DAX 30 (DAX) lost 0.7% to 7,178.90, led by a 2.2% decline in Deutsche Bank AG (DBK) and a 1.9% drop in car maker Daimler AG (DAI) . Shares of airline Deutsche Lufthansa AG (LHA) fell 2% on concerns fuel prices will rise.
In other German trading, reinsurer Hannover RE (HNR1) rose 1.8% after it said the financial hit from the earthquake in New Zealand last month would be €150 million at the most.
In the U.K., the FTSE 100 index (UKX) finished down 0.2% to 5,990.39. One of the top losers in the FTSE was advertising and media giant WPP PLC (WPP), which slipped 2.6%. The group reported a 34% increase in 2010 net profit and forecast organic revenue growth of around 5% this year.
Manoj Ladwa, senior trader at ETX Capital, said in e-mailed comments that while the company has guided favorably for the year ahead, investors are seeing it as “an opportunity to take money off the table.”
Meanwhile, engineering group IMI PLC (IMI) extended Thursday’s gains, rallying another 1.5%. Credit Suisse upgraded IMI to neutral from underperform, citing management’s focus on growth and its resolve to accelerate acquisitions, if needed.
In other U.K. trading, shares of online grocery retailer Ocado Group PLC (OCDO) gained 1.5% after the group said gross sales in the latest quarter rose 25%.
Some rating changes moved stocks. News agent and book retailer WH Smith PLC (SMWH) gained 2.2% after UBS raised its rating on the stock to buy from neutral. The broker said the group should see less gross margin pressure in the future and potentially benefit from rival Waterstone’s shutting more stores.
