European stocks waver, but best week in two months in sight
European stocks wobbled Friday, with bank shares holding largely steady, but the market was headed for its best weekly performance in more than two months.
The Stoxx Europe 600 SXXP, +0.08% was down less than 1 point at 386.13 after a higher open. Industrial and utility shares were losing the most, but basic material and health care stocks rose.
For the week, the pan-European benchmark was looking at a 1.6% rise, which would be the largest since the week ended May 5, FactSet data show. Wednesday’s session marked the largest percentage gain since late April after Federal Reserve Chairwoman Janet Yellen said U.S. interest rates don’t have to rise all that much further.
“European equities are broadly flat … as a lack of new macroeconomic news has left traders in wait- and-see mode,” David Madden, chief market analyst at CMC Markets, wrote Friday. “Overall, things are quiet positive, as Federal Reserve Chair Janet Yellen holds an upbeat outlook for the U.S. economy but won’t be calling for interest rate hikes anytime soon,” he said.
With the Fed in much of the market’s focus this week, investors on Friday appeared to take a cautious step ahead of U.S. inflation data for June, due at 1:30 p.m. London time, or 8:30 a.m. Eastern Time. Analysts say the closely watched report on consumer prices could help determine the next policy move from the Fed.
The euro EURUSD, +0.1491% was buying $1.1413, compared with $1.1399 late Thursday in New York.
Banks: A wave of bank earnings will be released in the U.S., including figures from Citigroup Inc. C, -0.03% and J.P. Morgan Chase & Co. JPM, -0.11% The Stoxx Europe 600 Bank Index FX7, +0.01% was up less than 0.1%.
“At a time when more central banks are talking about retreating from QE, a more hawkish European Central Bank would also be positive for European banks, with a focus on how quickly and by how much rates could go up,” said analysts at UBS in a research note published Friday.
Increases in short-term lending rates by central banks should lead to higher profit margins for banks. Among major European lenders on Friday, shares of Deutsche Bank AG DBK, -0.18% DB, -0.85% edged up 0.1%, Banco Santander SA SAN, -0.22%SAN, +1.04% was off 0.1% and BNP Paribas SA BNP, -0.42% gave up 0.5%.
The ECB will release its latest decision on monetary policy on July 20.
Stock movers: Skanska AB SKAB, -5.71% fell 3.6% after the Swedish construction company said it’s writing down roughly 780 million Swedish kronor ($934 million) in certain U.S. and U.K. operations in the second quarter. Operating income for the period is expected at 1.5 billion Swedish kronor, down from 1.7 billion Swedish kronor in the year-ago period.
National indexes: Germany’s DAX 30 index DAX, +0.03% rose 0.1% at 12,647.97, while France’s CAC 40 index PX1, +0.16% climbed 0.2% to 5,243.05. But the U.K.’s FTSE 100 index UKX, -0.18% was flat around 7,410.19.