EUROPE MARKETS: European Stocks Wobble In Muted Action, But Earnings Provide Some Uplift

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Eurozone preliminary PMIs show slowing growth in October

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European stock markets scrabbled for firm direction Tuesday after two days of gains, as data showed a slowing in the eurozone economy ahead of a closely watched European Central Bank meeting later in the week.

Investors were wading through a stream of corporate earnings updates. Shares of Apple supplier AMS AG surged more than 20%, while hospitality chain Whitbread PLC shares lost ground.

What stock indexes are doing

The Stoxx Europe 600 index fell 0.2% to hit 390.37, on track to reverse its recent advances. On Monday, the pan-European benchmark rose 0.2% (http://www.marketwatch.com/story/spanish-stocks-lower-as-catalan-standoff-continues-but-dax-eyes-record-2017-10-23) for a second straight session of gains, as a drop in the euro appeared to give stocks a lift.

The euro was buying $1.1757, barely budging from $1.1751 late Monday in New York.

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In Madrid, the IBEX 35 rose 0.3% to 10,194.90, as jitters over the political standoff between Spain's central government and Catalan separatists abated somewhat.

But overall, national indexes have been looking for firm footing. Recently, Germany's DAX 30 index tacked on 0.2% to 13,025.63, after earlier trading in the red. Meanwhile, France's CAC 40 added 0.2% at 5,398.97.

In London, the FTSE 100 turned up 0.1% to 7,529.43, while Italy's FTSE MIB rose 0.4% to 22,463.97.

What's driving markets?

While the national indexes are showing little action, a number of individual stocks are showing big moves as corporate financial reports slide in.

Investors may also be holding off on making a move ahead of the European Central Bank's policy decision on Thursday, where ECB President Mario Draghi is widely expected to outline a plan to begin tapering the central bank's bond purchases. But there seems to be little consensus among analysts as to what shape this will take.

See:Mario Draghi needs to avoid a 'taper tantrum' when the ECB meets (http://www.marketwatch.com/story/mario-draghi-needs-to-avoid-a-taper-tantrum-when-the-ecb-meets-2017-10-23)

What strategists are saying:

-- "Equity markets in Europe are a mixed bag this morning, and the one common theme is low volatility. Even the IBEX 35 has hardly moved, which gives you an idea of how quiet things are today," said David Madden, analyst at CMC Markets. "The FTSE 100 has been drifting lower over the past few sessions, and we may see it retest the 7,500 mark."

-- "[The euro] remains in a holding pattern ahead of the ECB's decision this Thursday, where our economists expect a dovish taper," said Sue Trinh, head of Asia FX strategy at RBC Capital Markets.

Stock movers:

AMS shares (AMS.EB) soared 21% as the semiconductor maker forecast "very strong" fourth-quarter revenue growth, with sales to come in at EUR440 million to EUR480 million (http://www.marketwatch.com/story/ams-shares-jump-more-than-20-as-quarterly-sales-surge-2017-10-24). Third-quarter group revenue was EUR262.6 million, up 79% from EUR146.7 million a year ago.

Whitbread PLC shares (WTB.LN) lost 5.2% on Tuesday. The hospitality chain operator reported a rise in group sales and revenue, but a slowdown in like-for-like sales growth at its Costa high-street coffee outlets.

Covestro AG (1COV.XE) jumped 5.5%. The German specialty chemicals company said it plans to buy back up to EUR1.5 billion in shares, or 10% of its outstanding capital stock (http://www.marketwatch.com/story/covestro-plans-15-billion-share-buyback-2017-10-24), depending on which value is reached first.

Boliden AB shares (BOL.SK) stumbled 8.6% after third-quarter earnings from the Swedish mining company missed analysts expectations. The company also said Chief Executive Lennart Evrell will step down in 2018.

Commerzbank AG (CBK.XE) bulked up 3.6% following reports the Frankfurt-based lender has hired financial advisers as it prepares for possible takeover bids. The bank has been working with Goldman Sachs and Rothschild to assess possible M&A tie-ups, the Financial Times reported (https://www.ft.com/content/087021f6-b805-11e7-8c12-5661783e5589?mhq5j=e5).

Economic data:

Data firm IHS Markit on Tuesday said its flash composite Purchasing Managers' Index for the eurozone fell to 55.9 in October, from 56.7 in September, to reach a two-month low. A reading above 50.0 signals an expansion in activity.

The decline in the measure (http://www.marketwatch.com/story/eurozone-economy-appears-to-slow-in-october-2017-10-24) was larger than expected, and was driven by services companies, which rely more heavily on domestic demand than their manufacturing counterparts.

"The eurozone PMI figures seen this morning point towards a stabilization in growth, with manufacturing gains making up for slowing services sector growth," said Joshua Mahony, market analyst at IG.

"However, taking today's figures in their entirety, it is clear that the manufacturing sector remains the reliable element of eurozone growth, with French, German and eurozone manufacturing all breaking market expectations," he said in a note.

Business activity in Germany, Europe's largest economy, rose in October, but at a slightly lower rate than in the previous month. Its preliminary composite PMI came in at 56.9, also a two-month low. September's reading was 57.7.

(END) Dow Jones Newswires

October 24, 2017 06:08 ET (10:08 GMT)