EUROPE MARKETS: Deutsche Bank, Daimler Yank Germany's DAX To Close Lower After Earnings

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02/02/2017 | 06:57 pm

By Carla Mozee and Sara Sjolin, MarketWatch

Reckitt Benckiser in talks to buy Mead Johnson Nutrition Co.

European stocks lost ground Thursday, with Deutsche Bank AG among the companies whose shares investors are chopping down in the wake of financial updates.

The Stoxx Europe 600 index gave up 0.3% to close at 361.95, paring back from a 0.9% gain made in the previous session .

U.K. stocks, however, bucked the negative trend on Thursday , moving higher after the Bank of England struck a more dovish tone in its latest policy update than analysts had expected.

Deutsche Bank rout: Shares of Deutsche Bank (>> Deutsche Bank AG) (>> Deutsche Bank AG) were near the bottom of the Stoxx 600, with a 5.2% slide putting them on course for their worst session in fourth months. The lender posted a worse-than-expected fourth-quarter net loss of EUR1.9 billion ($2.05 billion) after taking EUR1.6 billion in litigation charges .

The bank, which has recently agreed to settle some large legal matters in the U.S. and the U.K., still has unresolved investigations.

The drop in Deutsche shares was helping to push Germany's DAX 30 index lower by 0.3% to close at 11,627.95.

Other movers: Also in Frankfurt, shares of Daimler AG (>> Daimler AG) fell 2.7%. The auto maker's fourth-quarter net profit rose to EUR2.15 billion , but that fell short of a projection of EUR2.26 billion in a Dow Jones survey of analysts.

Novo Nordisk A/S (NOVO-B.KO) (NOVO-B.KO) fell 7.3% after the Danish drugmaker cut its sales and operating profit outlook .

On the upside, Reckitt Benckiser (>> Reckitt Benckiser Group Plc) rose 4.1%. The maker of Lysol and Vanish has confirmed it's in talks to buy baby-food maker Mead Johnson Nutrition Co. (>> Mead Johnson Nutrition CO) in a deal worth $16.7 billion.

Meanwhile, Swatch Group Ltd. shares (>> The Swatch Group SA) climbed 1% after the Swiss watchmaker said 2016 net profit dropped 47% to 593 million Swiss francs and revenue fell 11% to 7.55 billion Swiss francs. But Swatch anticipates "healthy growth" in 2017.

Royal Dutch Shell PLC (>> Royal Dutch Shell Plc) (>> Royal Dutch Shell Plc) ended up 1.6%, with the oil producer saying fourth-quarter cash flow from operations leapt nearly 70% to $9.2 billion. That appears to be enough to cover Shell's cash dividend payments for the period. Fourth-quarter and annual profit at Shell dropped.

BOE's 'Super Thursday': The Bank of England in its quarterly inflation report lifted its growth forecast for the U.K. sharply, but signaled it was in no rush to raise interest rates. The central bank now sees gross domestic product expanding by 2% this year, up from 1.4% expected earlier.

However, the bank also said it sees inflation peaking a little under 2.8% in 2018, compared with a little above 2.8% in the November inflation report, before falling back to 2.4% in three year's time.

"Combine this with comments from [BOE Governor Mark] Carney suggesting he could also see scenarios where rates move in 'either direction' and things were more dovish than the pound would have liked," said Connor Campbell, financial analyst at Spreadex, in a note.

The pound slid to $1.2536, down from $1.2665 ahead of the BOE releases. Sterling fetched $1.2658 late Wednesday in New York.

Also: Time to buy the beaten-down pound? Bank of America spots a sterling bottom

National indexes: The pound slump gave a boost to the U.K's FTSE 100 which rose 0.5% to end at 7,140.75. About 75% of revenue from the FTSE 100 are generated overseas, so a weaker sterling boosts the earnings of companies with international profits.

France's CAC 40 closed marginally lower at 4,794.29 and Switzerland's SMI pulled back 0.6% to 8,276.70.

The euro was buying $1.0802 versus $1.0768 late Wednesday.

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