EUROPE MARKETS: Europe Stocks Struggle; LVMH, Pearson Higher

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- Europe's main stock market was set to close the week with a slight loss after a choppy session Friday as investors grew cautious ahead of next week's Federal Reserve meeting.

On the upside LVMH Moet Hennessey Louis Vuitton SA, Belgacom SA and Pearson PLC all gained on results.

The Stoxx Europe 600 index flattened out below the key 300 level at 299.10, headed for a weekly loss of around 0.2%. The index closed 0.5% lower a day earlier as investors fretted about economic growth in China and a downbeat set of earnings from some big companies. See video: Europe's Week Ahead

The global backdrop was mixed, with U.S. markets paring losses after an upbeat reading on consumer sentiment. Stocks in Japan sank 3% as exporters fell on a strong yen.

"European markets are trading cautiously because traders are not willing to place better bets ahead of the FOMC [Federal Open Market Committee] meeting" next week, said Naeem Aslam, chief market analyst at Ava Trade, in emailed comments.

"This is despite the fact that Bernanke may deliver another well prepared statement on Wednesday and may keep the current pace of the asset purchase," said Aslam. "However, the market is also very much used to an idea of surviving without the stimulus help, but it is the earnings results which has dampened the mood in Europe."

Stocks fell on Thursday after companies such as BASF SE delivered earnings below analysts' forecasts.

There was a little bit of earnings cheer on Friday. Atop the Stoxx Europe 600 gainers, Pearson PLC shares jumped 6%. The publisher said it swung to a first-half loss as it continues to restructure its business. The company said in trading terms, 2013 has begun as expected.

The FTSE 100 index fell 0.3% to 6,570.12. Shares of GlaxoSmithKline PLC (GSK) fell over 1%. Shares of British Sky Broadcasting Group PLC fell close to 4%, even as it reported a rise in full-year profit, but analysts noted shares have had a strong recent run.

Also surging, shares of Belgacom SA jumped 10% after the telecommunications group's results beat analysts' expectations and the company also said it was on track to meet full-year guidance.

Friday also marks the one-year anniversary of a promise by European Central Bank President Mario Draghi to do "whatever it takes" to preserve the euro. In an interview with Handelsblatt newspaper, former ECB chief economist Jurgen Stark warned that the crisis will likely come to a head in late autumn and France could be the next to require use of the ECB's bond-buying Outright Monetary Transactions program.

Analysts at Credit Suisse upgraded the banking sector to overweight from benchmark, citing "clear signs" of macro improvement in the euro area and attractive valuations. European banks, the analysts noted, are trading at a near-record 42% price/tangible book versus U.S. banks. That ratio refers to the price of a security versus its value, excluding intangible assets.

Top picks for Credit Suisse include HSBC PLC (HBC) , BNP Paribas SA , Societe Generale SA , Julius Baer Gruppe AG and Deutsche Bank AG .

Shares of HSBC were flat in London, but in Paris, BNP Paribas rose 1.4% and Societe Generale edged up 0.4%. The French CAC 40 index rose 0.7% to 3,983.32, boosted as LVMH Moet Hennessey Louis Vuitton rose over 4%. The luxury goods group reported the prior day that organic growth in the second quarter rose 0.9%, accelerating from the first period.

Also in that sector, shares of Kering SA rose nearly 4%. The owner of the Gucci label said sales growth for its luxury unit rose 6% in the second quarter, from 4.5% in the prior quarter.

Not seeing any gains, the German DAX 30 index fell 0.4% to 8,258.54. Autos were leading the decliners, with Daimler AG down 1.7%. Concerns about Chinese growth have been weighing on growth stocks this week.

Also down, shares of heavyweight Seadrill Ltd. fell 1.3% after HSBC cut it to neutral from overweight.

Some peripheral indexes were faring better than the core markets. The IBEX 35 index jumped 1.2% to 8,373.40, as Banco Santander SA (SAN) rose over 1%.

The Greek ASE Composite index rose 2.6% to 865.18, with shares of Hellenic Telecommunications Organization SA up nearly 3%.

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