EUROPE MARKETS: European Stocks Seesaw Around 10-week High As Banks Rise, H&M Slides

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Euro gains slightly from late-Wednesday levels

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European stocks wavered Thursday, potentially moving toward their first loss in six sessions. Shares in Swedish apparel retailer H&M slid after a disappointing earnings report, but bank shares extended gains on rate-hike prospects.

The Stoxx Europe Index was up less than 1 point at 385.74 and has been swaying between small gains and losses. Decliners were led by consumer-related and utility stocks. But oil and gas and financial shares were among advancing sectors. The index on Wednesday closed up 0.4% (http://www.marketwatch.com/story/european-stocks-jump-to-10-week-high-led-by-alstom-after-siemens-deal-2017-09-27), marking a 10-week high and its fifth win in a row, aided by gains for bank stocks.

Bank stocks outperformed the broader market again Thursday, pushing the Stoxx Europe 600 Banks Index up by 0.8%, as investors priced in the prospect of higher interest rates. Higher rates tend to boost the banking sector as it means they can charge more for their loans.

In that group, Germany's Deutsche Bank AG (DBK.XE) (DBK.XE) drove up 3.9%, Spain's Banco Santander SA (SAN) rose 1.2%, France's Societe Generale SA (GLE.FR) gained 1.3% and the U.K.'s Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) rose 0.6%.

Bank of England's Chief Economist Andy Haldane, in a Sky News interview (http://news.sky.com/story/interest-rate-rise-should-not-be-feared-says-bank-of-england-economist-11056411) published late Wednesday, said a rise in borrowing costs would represent a "good news story" as it would reflect improvement in the British economy.

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"The markets believe a hike in U.K. rates could come after the Bank of England November 2nd meeting, with suggestions of a 0.25% hike to 0.5%," said analysts at FXPro in a note.

Haldane's comments came as Boston Federal Reserve President Eric Rosengren late Wednesday said he backs 'regular and gradual' interest-rate rises (http://www.marketwatch.com/story/feds-rosengren-backs-regular-and-gradual-interest-rate-hikes-2017-09-27). Earlier this week, Federal Reserve Chairwoman Janet Yellen said she plans for the Fed to keep raising interest rates gradually even though inflation has softened.

Stock movers: Hennes & Mauritz AB, better known as H&M, (HM-B.SK) stumbled 5.5%, with the shares on track for their biggest loss in more than a year. The move came after the company's third-quarter pretax profit of 4.94 billion krona fell short of expectations of 5.19 billion krona, according to Dow Jones Newswires.

H&M said its growing online sales didn't fully compensate for reduced footfall to stores in several of its established markets. That "has resulted in our total sales development not reaching our targets so far this year," said H&M Chief Executive Karl-Johan Persson in a statement.

Shares of Imperial Brands PLC (IMBBY) (IMBBY) dropped 2.2% after the tobacco company said it's on track to meet its full-year targets (http://www.marketwatch.com/story/imperial-brands-says-set-to-meet-fy-expectations-2017-09-28) and that it's working on a rescue deal for struggling wholesaler Palmer & Harvey Holdings PLC.

TUI AG was down 1% after the travel operator said recent hurricanes had affected its Caribbean operations (http://www.marketwatch.com/story/tui-backs-guidance-despite-impact-of-hurricanes-2017-09-28). The company, however, still backed its 2017 fiscal guidance and said the summer 2017 season is closing out almost fully sold at 97%.

Indexes: France's CAC 40 index was up 0.2% at 5,291.11. Germany's DAX rose 0.4% to 12,701.54.

In the U.K., the FTSE 100 index rose 0.1% to 7,317.

Spain's IBEX 35 index rose 0.1% to 10,374.

Read:Disputed Catalonia independence referendum set for Oct. 1 (http://www.marketwatch.com/story/german-election-result-revives-eurozone-jitters-as-investors-turn-attention-to-spain-2017-09-25)

The euro bought $1.1766, up slightly from $1.1745 late Wednesday in New York.

(END) Dow Jones Newswires

September 28, 2017 06:21 ET (10:21 GMT)