UKX FTSE 100 Index

By Carla Mozee and Sara Sjolin, MarketWatch

Germany business climate index falls

European stocks closed slightly lower on Thursday, after paring losses into close as U.S. stocks rebounded after upbeat data on the labor market.

Stocks had opened in deep negative territory, tracking late-session losses in the U.S. on Wednesday that came after minutes from the Federal Reserve's meeting last month suggested more interest-rate hikes are in the pipeline.

Where were markets trading?

Stoxx Europe 600 index fell 0.2% to close at 380.34, after trading as low as 376.92 earlier in the day.

Germany's DAX 30 index dropped 0.1% to 12,461.91, while the U.K.'s FTSE 100 slid 0.4% to 7,252.39.

France's CAC 40 ended 0.1% higher at 5,309.23.

(http://www.marketwatch.com/story/european-stocks-struggle-as-hsbc-bhp-billiton-updates-disappoint-2018-02-20)The euro bought $1.2330, up from $1.2286 late Wednesday in New York.

The yield on the 10-year German bond fell 2 basis points to 0.70%, according to Tradeweb. Yields fall when prices rise.

What drove markets?

European equities opened lower after minutes of the Fed's January meeting (https://www.federalreserve.gov/monetarypolicy/fomcminutes20180131.htm) out late Wednesday showed officials see an "increased likelihood" of further interest rate increases, heightening prospects for a rate rise in March. Policy makers now see the U.S. economy as getting stronger than it was at the end of 2017.

That news helped push the U.S. 10-year Treasury note yield up closer to the 3% mark, which spooked the equity markets.

However, European stocks trimmed their losses on Thursday afternoon and tracked U.S. stocks higher (http://www.marketwatch.com/story/dow-futures-slide-more-than-100-points-as-fed-driven-jitters-persist-2018-02-22). The move came as data showed jobless claims in the U.S. fell by 7,000 to 222,000 last week (http://www.marketwatch.com/story/us-jobless-claims-drop-7000-to-222000-and-fall-back-to-45-year-low-2018-02-22), marking the second lowest level since the end of the 2007-2009 recession.

Economic data

Minutes from the European Central Bank's January meeting (http://www.marketwatch.com/story/euro-slips-after-ecb-minutes-show-preference-for-keeping-easing-bias-2018-02-22) showed officials thought it was "premature" to change its forward guidance as inflation remained too far from the ECB's target of just below 2%. However, the account also showed that the ECB could revisit its forward guidance on quantitative easing "early this year".

The Ifo survey out earlier in the session showed German businesses were less enthusiastic about current conditions, although that particular indicator still notched its second-highest level since 1991. The business climate index fell to 115.4 points (http://www.marketwatch.com/story/german-business-euphoria-fades-in-february-ifo-2018-02-22) in February, below the 117.0 points expected from a FactSet consensus poll of analysts.

The U.K.'s Office for National Statistics revised its estimate of U.K. GDP growth (https://www.marketwatch.com/story/uk-economy-lagged-more-than-thought-in-2017-2018-02-22https:/www.marketwatch.com/story/uk-economy-lagged-more-than-thought-in-2017-2018-02-22) in the fourth quarter down to 1.4%, from 1.5%, year on year. The shutdown of a major oil field for repairs in December hit oil-and-gas production harder than first believed, the ONS said.

What strategists are saying

"Despite some [Fed] members advising patience, most analysts forecast a possible shift from three to four rate increases in 2018. [A] March rate hike became imminent after the release of the minutes," said IronFX senior research analyst Peter Iosif in a note.

"The minutes of the latest ECB meeting, in January, showed that the cautious tone remained, with most policy makers considering it premature to change the forward guidance, given that inflation remains significantly below the central bank's 2% target level," said Fiona Cincotta, senior market analyst at City Index, in a note.

"However, they added that the forward guidance on quantitative easing could be revisited early this year, boosting hopes of an announcement in March," she added.

Stock movers

Barclays shares (BCS) (BCS) surged 4.4% after the bank said it would more than double its dividend next year (http://www.marketwatch.com/story/barclays-swings-to-loss-vows-to-double-dividend-2018-02-22-34852558) even as the bank swung to a full-year loss of GBP1.9 billion ($2.64 billion).

Topping the Stoxx 600, Genmab A/S shares (GEN.KO) soared 18% as the Danish biotech firm posted a 30% rise in 2017 revenue, mainly driven by higher royalties of its Darzalex blood cancer drug.

Anglo American PLC shares (AAL.LN) posted 2017 net profit of $3.17 billion (http://www.marketwatch.com/story/anglo-american-profit-almost-doubles-in-2017-2018-02-22), missing the $3.25 billion consensus estimate from FactSet. Stocks traded lower earlier in the day, but ended 0.2% higher.

British American Tobacco PLC (BATS.LN) (BATS.LN) fell 2.2%. The maker of Lucky Strike and Dunhill cigarettes said its pretax profit increased more than fourfold in 2017, on gains related to the acquisition of Reynolds American Inc. and credits related to U.S. tax reform. Volume of sales of cigarette and tobacco-heated products fell 2.6%.

Moneysupermarket.com Group PLC shares (MONY.LN) tumbled 14%, leading losses on the Stoxx 600, after the price-comparison company warned that while pretax profit for 2017 rose on higher revenue that it expects to grow more slowly in 2018 than anticipated (http://www.marketwatch.com/story/moneysupermarketcom-2017-profit-up-warns-on-2018-2018-02-22).

Rovio Entertainment Oyj (ROVIO.HE) tanked 50% after the "Angry Birds" maker warned revenue would be flat or lower in 2018 (http://www.marketwatch.com/story/angry-birds-makers-shares-slide-45-on-warning-2018-02-22) as it struggles to bring in and hold on to new players.

(END) Dow Jones Newswires

February 22, 2018 12:15 ET (17:15 GMT)

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