By Sara Sjolin
LONDON (MarketWatch) -- European stock markets generally pulled
back on Friday after a disappointing take on German business
confidence and as investors digested another round of quarterly
earnings.
The Stoxx Europe 600 index shed 0.1% to close at 320.09,
trimming its weekly gain to 0.5%.
"It's been one of those weeks where bad news is good news. The
delayed nonfarm-payrolls numbers were disappointing, but markets
were rising on expectations that tapering [in the U.S.] may not
happen this year and maybe not even until March next year," said
Richard Hunter, head of equities at Hargreaves Lansdown.
"Today we are waiting for something new to happen, and there's
an element of profit-taking. In terms of what we're waiting for,
next week there's a whole host of corporate results out. Almost all
the U.K. banks report, along with oil majors like BP and Shell , on
top of Next . So next week is much about U.K. companies," he
added.
Corporate results were also among highlights on Friday. Shares
of Electrolux AB posted one of the biggest losses in the
pan-European index, skidding 5.8%, after the Swedish
household-appliance maker reported a drop in third-quarter earnings
and said it would cut costs to adapt to the European market.
Another Swedish firm, truck maker Volvo AB , slid 6.6% after
saying it expects the European truck market to remain unchanged in
2014, while also posting earnings below expectations.
Renault SA closed 3.2% lower in Paris after the car maker late
Thursday reported a 3.2% drop in third-quarter revenue.
Germany Ifo disappoints
More broadly, investors looked to Germany, where business
confidence took a surprise dip in October. The Ifo Business Climate
Index fell to 107.4, missing analyst expectations and marking the
first decline in six months. The Ifo expectations and
current-conditions surveys also unexpectedly slipped in
October.
Analysts at Société Générale said the data suggest "we could see
somewhat weaker activity towards the end of the year than we had
earlier expected."
"Still, numbers are well above historical averages, and fit with
our view of only a gradual recovery in Germany," they added.
Markets in Europe also took a turn for the worse in the
afternoon after a gauge of U.S. consumer sentiment fell to a final
October reading of 73.2 -- the lowest since December. Meanwhile,
U.S. wholesale inventories rose 0.5% in August, and wholesale sales
increased by 0.6%. U.S. stocks traded higher on Wall Street.
In the U.K., the Office for National Statistics said the British
economy expanded 0.8% in the third quarter, up from 0.7% in the
previous three-month period, marking the fastest rate of growth in
more than three years. GDP still remains 2.5% below its
pre-downturn peak in the first quarter of 2008. Analysts had
expected the economy to expand by 0.7% to 0.8%.
The data showed output from the four main sectors of the British
economy -- services, industrial production, construction, and
agriculture -- grew in the third quarter, indicating the recovery
is broad-based. On the year, output expanded by 1.5%.
"The recovery is running faster than the [Bank of England] had
anticipated. Growth was well above the 0.5% quarter-on-quarter rate
they had forecast back in August, and unemployment has come down
faster than they had expected. So we expect the first interest-rate
rise to come at least a year earlier than the late 2016 date the
BOE has signaled," Rob Wood, chief U.K. economist at Berenberg,
said in a note.
The U.K.'s central bank has linked a potential hike in interest
rates to a drop in joblessness, saying it won't consider raising
rates until unemployment falls below 7%, from the current level of
7.7%.
Movers
The FTSE 100 index added 0.1% to 6,721.34 and closed with a 1.5%
weekly gain.
Germany's DAX 30 index inched 0.1% higher to 8,985.74,
continuing its record run. On the week, the index closed up
1.4%.
Shares of BASF SE supported the German benchmark, rising 1.3%,
after the chemicals firm posted a 19% rise in third-quarter profit
and reiterated its full-year outlook.
Shares of Software AG climbed 4.8% after the company said it
would buy back its own shares worth up to 110 million euros ($151.6
million).
France's CAC 40 index shed 0.1% to 4,272.31 for a 0.3% weekly
loss.
Shares of Schneider Electric SA gave up 1.1% in Paris after the
electrical distribution firm lowered its full-year earnings
expectations on a third-quarter 3.2% decline in sales.
Kering SA lost 3% after the luxury-goods firm late Thursday
reported a drop in third-quarter revenue, with weakness seen for
the Gucci brand.
Shares of Compagnie de Saint-Gobain SA gained 4.9% after the
supplier of building materials said organic growth increased 3.1%
in the third quarter, with improvements reported by all
businesses.
Outside the major indexes, BBVA SA (BBVA) erased 2.3% after the
Spanish bank said it will cut the dividend payout on this year's
earnings and reported lower-than-expected profit for the third
quarter.
Novozymes AS lost 2% after the Danish industrial-enzymes
producer cut its outlook for the full year 2013 citing currency
effects.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires