By Carla Mozee and Sara Sjolin, MarketWatch

RBS shares drop after results; Deutsche Telekom shares rise

European stocks ended a bouncy session slightly higher on Friday, tracking gains for U.S. stocks as traders waded through a stream of corporate updates.

How markets are trading

After shifting between small gains and losses through the day, the Stoxx Europe 600 index ended 0.2% higher at 381.16. That helped swing the pan-European benchmark into positive territory for the week, ending with a 0.1% weekly gain.

France's CAC 40 closed up 0.2% at 5,317.37, while Germany's DAX 30 index rose 0.2% to 12,483.79.

Underperforming the major European indexes, the U.K.'s FTSE 100 dropped 0.1% to 7,244.41 (http://www.marketwatch.com/story/ftse-100-slips-heads-toward-weekly-loss-as-rbs-drops-after-results-2018-02-23).

(http://www.marketwatch.com/story/european-stocks-struggle-as-hsbc-bhp-billiton-updates-disappoint-2018-02-20)The euro bought $1.2296, down from $1.2332 late Thursday in New York.

The yield on the 10-year German bond fell 5 basis points to 0.650%, according to Tradeweb. Yields fall when prices rise.

What's driving markets

European equities this week have largely followed moves on Wall Street. Analysts have said the recent global rout in stocks stemmed largely from concerns that a quickening pace of U.S. inflation could prompt the Fed to raise interest rates more than anticipated this year.

In its latest report to Congress, the Federal Reserve gave no signs it was planning to hike rates (http://www.marketwatch.com/story/fed-on-track-for-3-rate-hikes-in-2018-but-4-no-sign-in-report-to-congress-2018-02-23) faster than currently expected, reflecting uncertainty among senior officials about how fast inflation will rise this year.

U.S. stock moved firmly higher on Friday, (http://www.marketwatch.com/story/dow-futures-surge-over-100-points-2018-02-23) after the S&P 500 and the Dow Jones Industrial Average finished Thursday with gains (http://www.marketwatch.com/story/dow-futures-slide-more-than-100-points-as-fed-driven-jitters-persist-2018-02-22).

What strategists are saying

"Fears revolving around rising inflationary pressures and rate hike jitters have certainly left investors skittish this trading week. Investors seem to be on edge about higher interest rates and as such, this continues to encourage global equity bulls and bears to engage in a tough tug of war," said Lukman Otunuga, research analyst at FXTM.

"With investors on guard as global stock markets become increasingly sensitive to the prospect of rising inflation and interest rates, equity bears could steal the show," he said in a note.

Stock movers

Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) shares dropped 4.8% as the majority state-owned lender posted its first full-year profit in 10 years. However, RBS said it has yet to agree a settlement (http://www.marketwatch.com/story/rbs-posts-first-full-year-profit-in-a-decade-as-litigation-costs-drop-2018-02-23) with the U.S. Department of Justice over alleged mis-selling of mortgage-backed securities.

Phoenix Group Holdings shares (PHNX.LN) jumped 7.3% after the insurer said it bought Standard Life Assurance Ltd. from Standard Life Aberdeen PLC in a reverse takeover for GBP2.93 billion ($4.09 billion). Shares of Standard Life Aberdeen (SLA.LN) ended down 2.5%.

Deutsche Telekom AG (DTEGY) shares rose 3.3%. The German telecommunications company said late Thursday it had returned to profit in the fourth quarter of 2017 (http://www.marketwatch.com/story/deutsche-telekom-swings-to-profit-in-4q-2018-02-22-14855018), largely boosted by the effects of U.S. tax reform.

Swiss Re (SSREY) rose 2.5% after the reinsurance heavyweight said it's not considering issuing new capital (http://www.marketwatch.com/story/swiss-re-profit-falls-assessing-softbank-alliance-2018-02-23). The company did say it's "carefully assessing" the implications of a deal with SoftBank Group Corp. (9984.TO) , and it reported a fall in net profit in 2017.

Valeo SA (FR.FR) tumbled 11%. The French automotive supplier said late Thursday its 2017 net profit fell year-on-year (http://www.marketwatch.com/story/valeo-profit-falls-despite-higher-sales-2018-02-22), despite both sales and order intake increasing.

International Consolidated Airlines Group SA shares (IAG.LN) (IAG.LN) fell 5.7%. The British Airways parent said it was engaging a EUR500 million share-buyback program (http://www.marketwatch.com/story/iag-expects-better-2018-eyes-sensible-growth-2018-02-23), and that pretax profit rose in 2017. The results were "mixed," said Accendo Markets, with revenues in line. while adjusted per-share earnings of EUR1.02 fell short of a EUR1.06 consensus estimate.

Economic data

Economic activity in Germany slowed toward the end of 2017, but a booming export sector kept Europe's largest economy on a solid growth path, according to new data. Germany's Federal Statistical Office said gross domestic product grew 0.6% (http://www.marketwatch.com/story/german-gdp-eases-to-25-in-q4-but-exports-boom-2018-02-23), or an annualized rate of 2.5%, in the fourth quarter, easing somewhat toward the end of 2017. The report confirmed preliminary figures.

Eurostat confirmed that eurozone inflation was at 1.3% in January, down from 1.4% in December.

(http://www.marketwatch.com/story/euro-slips-after-ecb-minutes-show-preference-for-keeping-easing-bias-2018-02-22)

 

(END) Dow Jones Newswires

February 23, 2018 12:12 ET (17:12 GMT)

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