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European Stocks Sneak Higher

European stocks ended with mild gains Tuesday, as investors positioned themselves ahead of the European Central Bank’s second liquidity boost.

The Stoxx Europe 600 index closed up 0.2% at 264.33. The U.K.’s FTSE 100 index ended up 0.2% at 5927.91, Germany’s DAX rose 0.6% to 6887.63 and France’s CAC-40 index ended 0.4% higher at 3453.99.

Stocks kicked off the session on a positive note, as market participants shrugged off Standard & Poor’s downgrade of Greece’s credit rating late Monday to “selective default.” The move was widely expected and came after banks agreed to write off more than half of their Greek debt holdings as part of the country’s second bailout. Tuesday, the ECB temporarily suspended the eligibility of Greek bonds as collateral.

Although the overall tone was upbeat, stocks were choppy and volumes were fairly light Tuesday, with traders noting some reluctance to make any bold moves ahead of the ECB’s second long-term refinancing operation. The strong gains made in equity markets at the start of 2012 have been attributed in large part to the ECB’s first round of LTRO in December last year. With this in mind, investors were waiting to see what the take-up will be like second time around, with an expected range of €250 billion to €600 billion.

With regards to economic news, much of the focus was on the U.S. European stocks took a turn for the worse after figures showed durable-goods orders fell 4% in January, against expectations for a 1.1% drop. There was also some bad news on house prices. The Standard & Poor’s Case-Shiller home price index showed prices fell in December, ending 2011 at the lowest levels since the housing crisis began in mid-2006. But a better-than-expected reading from the Conference Board consumer-confidence index for February helped stocks claw their way back into positive territory.

On the corporate front, Peugeot shares surged on news that General Motors may be buying a stake in the company. However, by the time of the markets’ close, the stock was up just 0.4%, after The Wall Street Journal reported the stake sale was part of a €1 billion, potentially discounted, share sale by Peugeot.

On the downside, Dutch navigation-equipment maker TomTom slumped 15% on a disappointing outlook. It said revenue is set to decline this year, as lower sales at its consumer business contributed to a 77% fall in fourth-quarter net profit.

By the time of the European stock markets close, the single currency was trading at $1.3462 from $1.3398 late Monday, while the dollar was at ¥80.44 from ¥80.61. Sterling last traded at $1.5887 from $1.5824.

Late in Europe, light, sweet crude for April delivery was down 28 cents at $108.28 on the New York Mercantile Exchange. Gold for April delivery was up $11.10 at $1,786.00 per troy ounce late in Europe on the Comex division of Nymex.

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  1. March 16, 2012 at 4:30 am

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