European Stocks Turn Around as Telecoms Lead Direction
LONDON -- European equity markets have seen a full turnaround this morning, buoyed at the open by potentially positive news from China, then turning around before the U.S. open to sink well into negative territory. The drop came as U.S. futures declined due to some weaker-than-expected earnings results, while the telecommunications sectors in Europe saw sharp selling pressure following mildly negative news from some large names.
Benchmark indexes started on a much more upbeat note this morning after data overnight showed Chinese inflation had slowed for a fourth consecutive month, promoting hopes that the Asian giant will begin to do more to stimulate its economy. These gains were soon pared, however, with the Spanish IBEX (INDEX: ^IBEX) now leading losses, down 1.1%.
As always, the following price moves are based on this morning's European trading.
Deutsche Telekom (NASDAQOTH: DTEGY.PK) is one of the worst telecom performers today, down 2.2% after starting the day in a much more buoyant fashion. This came despite today's report of better-than-expected profits owing to lower handset subsidies in the U.S., with focus instead turning to news that it had lost more customers at its U.S. unit than was expected by most analysts.
At the same time, France Telecom (NYS: FTE) is down almost 2% following news that its debt rating may be lowered by Moody's. Moody's reduced its outlook on FTE's "A3" rating from stable to negative due to concerns that competition with discount operator Iliad will make it tougher to reduce operating expenses.
Elsewhere, Commerzbank (NASDAQOTH: CRZBY.PK) is down 4.7% in Frankfurt after it said profit in the second half will fall significantly because of slowing economic growth and higher loan-loss provisions. The company set aside 616 million euros for doubtful loans in the quarter and called its 1.7 billion euro loan-loss provision for 2012 increasingly ambitious.
The company reported first-half net income of 644 million euros thanks to the large loan writeoff, at the same time saying it is less likely to pay a dividend as it continues its efforts to reduce costs. CFO Stephen Engels also said Commerzbank does not expect the economic and market environment to stabilize in the second half of this year.
On a more positive note, Finnish phone maker Nokia (NYS: NOK) is making strong headway today after it said it will sell its Qt app-tools unit to Digia. The unit was originally bought in 2008 to develop applications for Symbian and MeeGo operating systems on Nokia phones. However, the company has long since stopped using this software in favor of Microsoft Windows Phone. Nokia shares are up more than 8.3%.
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The article European Stocks Turn Around as Telecoms Lead Direction originally appeared on Fool.com.Karl Loomes does not own any share mentioned in this article.The Motley Fool owns shares of France Telecom. Motley Fool newsletter services have recommended buying shares of France Telecom. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.