European stocks choppy; German political crisis in focus
A broad gauge of European stocks steadied at the end of trade Thursday, after spending the session struggling to find firm direction. But French blue-chip shares climbed after data showed the country led the strengthening in the eurozone economy this month.
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How key gauges moved: The Stoxx Europe 600 closed up less than 1 point at 387.12 after a topsy-turvy session for European equities. The index had risen as much as 0.2% and lost as much as 0.6% intraday. The financial and utility sectors closed in the red, but consumer goods and telecom shares led advancers.
Trading volumes were likely thin, as U.S. markets were closed for the Thanksgiving Day holiday. On Wednesday, the Stoxx 600 fell 0.3% (http://www.marketwatch.com/story/ftse-100-on-course-for-3rd-straight-gain-with-uk-budget-on-deck-2017-11-22), snapping a two-day run of gains.
In Paris, the CAC 40 sloughed off losses and finished up 0.5% at 5,379.54, the highest close since Nov. 10, according to FactSet data.
In Frankfurt, the DAX 30 index ended down 0.5% to 13,008.55, adding to the 1.2% slide logged Wednesday.
In Madrid, the IBEX 35 picked up 0.2% to end at 10,032.80 while in London, the FTSE 100 index fell less than 2 points to 7,417.24 (http://www.marketwatch.com/story/uks-ftse-100-stumbles-after-three-day-advance-2017-11-23).
The euro bought (http://www.marketwatch.com/story/dollar-languishes-at-1-month-low-with-euro-cheered-by-economic-data-2017-11-23) $1.1851, up from $1.1824 late Wednesday in New York.
What drove markets: The main stock benchmarks pared losses or turned higher during the session after upbeat economic data, including a preliminary report on eurozone services and manufacturing activity that beat forecasts (http://www.marketwatch.com/story/eurozone-business-booming-as-pmis-jump-2017-11-23).
The composite Purchasing Managers Index for November rose to 57.5, its highest level since April 2011, said data firm IHS Markit. Economists widely expected an unchanged reading. France led the way, with a surprise jump in its services sector PMI to 60.2, compared with an expected fall to 57.0.
One headwind to stocks was a rise in the euro, which has been gaining since the U.S. dollar was yanked down Wednesday by investors concerned about the pace of U.S. interest-rate hikes (http://www.marketwatch.com/story/fed-doubts-on-inflation-grow-but-rate-hike-likely-soon-minutes-show-2017-11-22). The upbeat economic data also helped lift the shared currency, analysts said.
A stronger euro can put pressure on shares of exporters as it makes products more expensive for holders of other currencies.
Attention was turning to the political turmoil in Germany, even as fresh figures showed the country's economy expanded in the three months to September. Pressure is growing on Martin Schulz, the leader of Germany's Social Democrats, to think again about a refusal to revive the "Grand Coalition" with Chancellor Angela Merkel's Christian Democrats.
The country has been thrown into political turmoil after this weekend's breakdown in talks to form a different, three-party, coalition government that would keep Merkel at the helm.
What strategists are saying: Traders "are keeping an eye on the outcome of the meeting between [German] President Steinmeier and SPD leader Schulz," said Naeem Aslam, chief market analyst at Think Markets, in a note.
"German party leaders do feel that they have a responsibility to form a government and the SPD leader has said that he is open for another round of talks with Merkel," Aslam said. "If we do see more tangible progress which helps Merkel to finally form a coalition, we do think that the euro could move higher and the EUR/GBP could surpass the mark of GBP0.90."
"In the short term, the impact from the current political impasse on the German economy should be (close to) zero. For the longer term, however, given the lack of structural reforms and the urgent need for investments in digitalization and education, German politicians should not waste too much time if they don't want to put the economy's future at risk," said Carsten Brzeski, chief economist at ING, in a note.
Stock movers: Centrica PLC shares (CNA.LN) plunged 15.5% to the bottom of the Stoxx 600, after the parent company of British Gas warned that its energy supply businesses have had a disappointing second half (http://www.marketwatch.com/story/centrica-says-on-track-to-hit-2017-targets-2017-11-23). It also gave a full-year adjusted earnings outlook that was below the market consensus.
Thyssenkrupp AG (TKA.XE) leapt 4% as the German conglomerate's fiscal 2017 adjusted earnings before interest and taxes rose 30% to EUR1.91 billion, exceeding a FactSet consensus forecast of EUR1.74 billion.
Altice NV shares (ATC.AE) jumped 3.9% following a Financial Times report that the French telecommunications company is seeking to sell its telecom network in the Dominican Republic.
Remy Cointreau SA (RCO.FR) fell 1.7% even as the company said first-half net profit rose to EUR89.2 million ($105 million) on stronger sales of its Remy Martin cognac (http://www.marketwatch.com/story/remy-cointreaus-earnings-lifted-by-cognac-sales-2017-11-23).
Economic data: Germany's gross domestic product grew at a quarter-to-quarter rate of 0.8% (http://www.marketwatch.com/story/german-economy-picked-up-speed-in-3q-2017-11-23) in the three months through September, or 3.3% in annualized terms, the Destatis statistics agency said Thursday, confirming preliminary growth estimates.
France's statistics bureau Insee said its monthly measure of manufacturing confidence rose one point to 112 in November (http://www.marketwatch.com/story/french-manufacturing-confidence-at-decade-high-2017-11-23-34855653), in line with economists' expectations as well as setting a fresh decade high.
(END) Dow Jones Newswires
November 23, 2017 12:13 ET (17:13 GMT)