After turning lower on banking sector concerns ahead of this weekend’s Basel Committee meeting, European stocks mostly recovered lost ground in the second half of Friday’s session.
The FTSE 100 index closed 7.5 points or 0.1% firmer at 5,501.6—closing above 5,500 for the first time since early May. The FTSE 250 index, which more closely represents the British economy, added 76.1 points or 0.7% to settle at 10,401.8. Other European indices also hovered around breakeven and Wall Street was broadly flat at last check.
In the only US economic data for the session, the wholesale inventories report for July indicated that inventories increased 1.3% during the month—better than the 0.4% improvement economists expected. Wholesale inventories for June were revised upward to a 0.3% increase from the previously announced 0.1% increase.
The news stimulated upward movement in stocks that had been losing ground since the higher open in the morning.
On this side of the Atlantic, banks were in focus ahead of the Basel Committee revising its capital requirements this weekend. As such, shares in European banks struggled, with Deutsche Bank among the worst off amid talk it is preparing to take the first step towards strengthening its balance sheet for Basel III with a potential EUR 9 billion share sale. Deutsche Bank’s shares fell 5% and other European banks followed suit. Read our analyst’s reaction to the Deutsche Bank rumours here. Shares in UK banks were more resilient than their eurozone counterparts, however, since the higher capital requirements already imposed by the FSA means British banks may have less to worry about.
Still, Barclays closed down 1.3%, hit by a Citigroup downgrade amid concerns over the investment banking arm’s revenues and costs. And Standard Chartered and HSBC closed 0.9% weaker and virtually unchanged, respectively.
Miners Eurasian Natural Resources Corporation, Anglo American and Rio Tinto shed 0.3%-1.7% as investors locked in profits following Thursday’s sector rally.
BP was in the news again after announcing it will delay the release of its upcoming earnings report to allow for extra time to prepare data and disclosures related to the Gulf of Mexico oil spill. The company's third-quarter earnings will be released November 2. Shares of BP closed down 0.9%.
On the upside, investment company 3i Group ticked up 2.6% after the Financial Times reported it is about to sell its holdings in Dutch pump-maker Hyva at a significant profit.
