By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stocks got an initial bump out
of better-than-expected U.S. jobs data before dropping a day after
markets rallied on signals the European Central Bank and Bank of
England will leave policy accommodative for some time to come.
The Stoxx Europe 600 index was last down 0.7% to 290.25. On
Thursday, the index closed up 2.3%, or 6.69 points, to 292.15,
which was the biggest one-day point and percentage gain since April
23. The index is looking at a 2% gain for the week.
Among movers, Sky Deutschland AG jumped over 3% after Goldman
Sachs added the pay-TV provider to its conviction-buy list. Shares
of Seadrill Ltd. were upgraded to buy from neutral at Bank of
America Merrill Lynch, triggering a more than 2% gain for the Stoxx
Europe 600 heavyweight offshore driller.
Data from the U.S. showed 195,000 jobs were created in June --
beating forecasts -- and employment gains in the prior two months
were stronger than originally expected. Wall Street stocks remained
higher, but Europe wasn't following.
Europe stocks backed off Thursday's rally, which came in large
part due to ECB President Mario Draghi, who said in a press
conference that interest rates in the region will remain low or go
even lower for an "extended period of time."
Helping out, the Bank of England, with new Governor Mark Carney
at the helm, triggered the biggest rise for U.K. stocks since the
autumn of 2011 after a statement from the central bank -- in itself
an unusual move -- also eased fears stimulus will be taken away
soon.
But some say markets may be jumping the gun on that dovish
assessment of those central banks.
"The statement following the BOE rate decision only claimed that
they will assess forward guidance for August, which in itself tells
us nothing," said Craig Erlam, market analyst at Alpari U.K., in a
note.
Erlam said it was always assumed some sort of forward guidance
will be issued by the U.K. central bank, and it's the details that
matter, of which there were none. "As far as I'm concerned, we're
no more clear now than we were this time yesterday," he said.
Erlam also saw no real news from Draghi either, in hindsight. He
noted that the central bank failed to give a benchmark -- date,
unemployment target or growth target -- along with that lower rate
assessment. "I think what we've seen once again is a commitment to
nothing, and the markets have just taken the bait," he said.
In a marked difference from the prior session, the German DAX 30
index fell 1.5% to 7,874.80, after a 2% rally the prior session,
while the French CAC 40 index fell 0.5% to 3,788.88 after a nearly
3% gain on Thursday.
Data from the U.S. showed 195,000 jobs were created in June --
beating forecasts -- and employment gains in the prior two months
were stronger than originally expected. Wall Street stocks remained
higher.
Peripheral markets mostly showed losses, with Portugal PSI 20
index down 0.5% to 5,402.92 after gaining 3.7% on Thursday.
Portugal's Prime Minister Pedro Passos Coelho appears to have
kept the coalition government from collapsing, though many say the
government remains in a fragile state after four days of political
upheaval sparked by the departure of two ministers.
The Spanish IBEX 35 index fell nearly 2% to 7,855.20, with Banco
Santander SA (SAN) off 1.8%. BBVA SA (BBVA) fell over 3%.
Greek stocks stood out with a gain of over 2%. The Athens Composite Index rose over 2% to 841.23.
Mining stocks staged a pullback after the prior-day's rally,
with BHP Billiton PLC (BHP) down 2.6%, Glencore Xstrata PLC off
3.6% and Rio Tinto PLC (RIO) down 3.2%. The FTSE 100 index also
ceded positive territory to fall 0.2% to 6,410.58. The index
rallied 3% on Thursday, its biggest percentage gain since late 2011
on Thursday.
Goldman Sachs said in a note Friday that it recommends going
long U.K. equities via the Dec. 13 future for a target of 7,100,
saying the economy looks to be on an upswing and monetary policy
looks set to ease further. It also sees the euro area stabilizing
in the second half of the year.
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