By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stocks fell on Friday after
solid U.S. jobs data stoked tapering fears, while stocks in France
slumped after Standard & Poor's lowered the country's credit
rating to AA from AA+.
The Stoxx Europe 600 index dropped 0.2% to close at 322.72,
trimming its weekly gain to 0.4%. The benchmark traded as low as
319.47 after the U.S. data, but pared losses as U.S. stocks
advanced.
"We might approach the end of the summer-outperformance period,
but in reality you can still imagine quality global data taking
markets higher. We're going into a seasonally strong period and
there's nothing particularly pressing in the euro zone likely to
raise the risk premium other than a slightly softer economy," said
Guy Foster, head of portfolio strategy at Brewin Dolphin.
"Looking at European markets off today, I think you can see
quite a few of them trading close to support levels and I would be
reluctant to be out of [the stock market]. It's a reasonable time
to be buying," he added. "We shouldn't be scared of the fact that
we're close to all-time highs for some markets. That's where we're
supposed to be."
French downgrade
France's CAC 40 index slid 0.5% on Friday to 4,260.44 and lost
0.3% on the week, after the country lost its AA+ rating. Standard
& Poor's raised concerns about the country's growth prospects,
saying the government's reforms to taxation, as well as to labor
and other markets, won't substantially raise the country's
medium-term outlook. Adding to pressure on the French index, data
showed the country's industrial production dropped 0.5% in
September, missing expectations of a small rise.
Banks dropped in Paris, with shares of Société Générale SA down
2.3%, BNP Paribas SA off 1%, and Credit Agricole SA 0.5% lower.
Shares of Total SA (TOT) dropped 1.2% after Belgian holding
group Groupe Bruxelles Lambert SA said it has sold a 0.3% stake in
the French oil giant.
Stock markets in Europe remained lower after data from the U.S.
showed 204,000 new jobs were added to the economy in October, well
above expectations. The unemployment rate rose to 7.3% from
7.2%.
Strong U.S. data strengthen the case for the Federal Reserve to
scale back its $85-billion-a-month in bond buys. On Thursday,
figures showing the U.S. economy grew by a better-than-expected
2.8% in the third quarter spooked investors and left markets in
both Europe and the U.S. in the red.
"Coupled with yesterday's better-than-expected third-quarter GDP
report, expectations of tapering are likely to be adjusted forward;
certainly the Hawks on the Fed will point to recent economic
reports as reason enough to begin rolling back monthly bond
purchases by year-end," said Lindsey M. Piegza, chief economist at
Sterne Agee, in a note.
Europe movers
On the data front in Europe, Germany's trade surplus beat
forecasts in September as exports rose for a second straight month.
Germany's DAX 30 index closed slightly lower at 9,078.28, but ended
the week up 0.8%. On Thursday, the index ended at an all-time
high.
Car stocks fell after Nomura cut the European auto and
auto-parts sector to bearish from neutral.
"Unlike many investors, we do not see or forecast a sharp
rebound in European car sales anytime soon," the analysts said.
"With declining populations, wage deflation, rising unemployment,
and continuing government deficits, we see no reason why European
car demand should not be compared with Japan's 20-year declining
car market as opposed to the V-shaped recovery in the U.S.," they
added.
Shares of Daimler AG dropped 1.4%, Porsche Automobil Holding SE
fell 1% and Volkswagen AG gave up 0.4%.
Rheinmetall AG slid 5.8% after the German weapons and car-parts
maker reported a sharp decline in third-quarter profit amid
restructuring expenses.
The U.K.'s FTSE 100 index gained 0.2% to 6,708.42, but dropped
0.4% on the week.
Shares of International Consolidated Airlines Group SA jumped 8%
in London after the British Airways parent said profit more than
doubled in the third quarter.
Rolls-Royce Holdings PLC climbed 3.4% after the aerospace and
defense firm said its overall estimate for "good growth" in
full-year underlying profit is unchanged from its previous forecast
in July.
Outside the major indexes, shares of Finmeccanica SpA lost 6%
after the Italian aerospace and defense firm said it won't be able
to reach its full-year target for earnings before interest, taxes
and amortization.
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