as weakening shares of banks and consumer product groups overshadowed a rally
in mining stocks buoyed by upbeat brokerage comments.
Pharmaceuticals were on the upside, with Sanofi-Aventis up
2.5 %, benefiting from results from a study that showed the company’s insulin
drug Lantus controls blood sugar as effectively as Eli Lilly’s Humalog.
At 1059 GMT, across Europe,
FTSE was up 0.1 %,
DAX up 0.2 %, and
CAC down 0.1 %.
The benchmark index is on track to end the week with a gain
of 3.6 % as investors have started to come back to stocks, hammered over the
past few months by concerns over the global credit crisis as well as fears of a
recession.
“We’re starting to see some relief in the wake of quite
decisive actions from the Fed and there is some hope that the worst of the
financial crisis and most of the writedowns are behind us,” said Ad van
Tiggelen, senior strategist at ING Investment Management.
“But chances are that we will see new lows in the
coming months, so I would still describe this rise more as a bear market rally
than as a start of a new bull market. It will remain a difficult environment
until investors see the low in earnings for the cycle, and I think that will
happen sometime next year, not this year,” he said.
The index has tracked global equities lower on fears that
credit-market ructions stemming from a meltdown in risky
broader economy and concerns over the financial sector, which has suffered
massive writedowns.
“The focus will now be more on
data, with the decoupling/recoupling story on one side and the earnings outlook
on the other side. Even if the
recession remains modest, we will see four to five quarters of downward
revisions of forecast, based on higher input costs, higher financing costs and
slower revenue growth,” van Tiggelen said.
Miners contributed the most points to the index, with Anglo
American up 4.1 %, Rio Tinto up 2.8 % and BHP Billiton rising 2.5 % after
Deutsche Bank lifted price targets for some companies in the sector.
Shares of banks and consumer products companies were among
the biggest laggards, with L’Oreal down 1.5 %, Danone down 1.1 %, Banco
Santander down 0.4 % and Deutsche Bank down 0.5 %.
Lloyds TSB fell 1.4 % after the Wall Street Journal reported
that the head of the British bank’s
move to Citigroup. A spokesman for Lloyds declined to confirm her move.
