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LONDON: European shares nudged lower yesterday, held back by weak utilities and banks, though strategists reckoned that any dips in the equity markets should be seen as a buying opportunity. The STOXX Europe 600 Utilities Index and the Banks index were both among the worst performing European sectors, off 0.6 percent.
Utilities were knocked by a 3.3 percent drop in Spanish power company Iberdrola, which traders attributed to signs that lender Bankia might be looking to sell its stake in the company.
The FTSEurofirst 300 provisionally closed down 0.1 percent at 1,162.21, around levels seen at the start of January.
While markets have been in a consolidation mode over recent weeks, continued loose monetary policy from central banks was one good reason to keep faith with the asset class, some said.
“I still remain fairly positive that after this pause markets will move higher,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.
Andrew Milligan, head of global strategy at Standard Life Investments, meanwhile, said: “I get the feeling that people are more looking to put money into the market than they are to take profits at this moment in time.”
US stocks were little changed yesterday and the S&P 500 remained on track for a seventh week of gains after upbeat consumer sentiment data, as equities continued a phase of consolidation after a strong start to the year.
The S&P 500, up nearly 7 percent so far this year, is facing strong technical resistance near the 1,525 level. But investors, expecting the index to advance further in the quarter, have held back from locking in profits.
“The market has run awfully hard on a year-to-date basis and certainly some consolidation, a couple of percentage points of pullback, is probably at hand, probably healthy and is probably where we are,” said Jim Russell, senior equity strategist for US Bank Wealth Management in Cincinnati. Data released yesterday illustrated the bumpy road the US economic recovery continues to take.
The New York Federal Reserve said manufacturing in New York state expanded for the first time in seven months, while Thomson Reuters/University of Michigan’s preliminary reading of consumer sentiment rose from the prior month and beat expectations.
But data also showed US manufacturing fell in January after a rise in the prior month. “We are at a point where the macro news will continue to be a two-steps forward, one-step back kind of progression, with most of the news showing a firmness, but an occasional data point that will represent a step back,” Russell said. The Dow Jones industrial average added 5.07 points, or 0.04 percent, to 13,978.46. The Standard & Poor’s 500 Index shed 0.20 points, or 0.01 percent, to 1,521.18. The Nasdaq Composite Index gained 1.02 points, or 0.03 percent, to 3,199.68.
The benchmark S&P 500 is on track to register its seventh straight week of gains by the close of trading yesterday, a feat not seen since a run of consecutive weekly gains between December 2010 and January 2011. A surge in merger and acquisition activity, with more than $158bn in deals announced so far in 2013, has given further support to the equity market as it points to healthy valuations and bets on the economic outlook.
Herbalife shares jumped 13.1 percent to $42.27 a day after billionaire investor Carl Icahn said in a regulatory filing that he now owns 13 percent of Herbalife and was ready to put it in play.
MeadWestvaco Corp climbed 10.6 percent to $35.04 as the biggest percentage gainer on the S&P index after activist investor Nelson Peltz’s Trian Fund Management LP said in an SEC filing it had bought about 1.6 million shares of the packaging company. Agencies