EUROPE MARKETS: European Stocks Wobble After U.S. Retail Data

By Sara Sjolin, MarketWatch

COPENHAGEN (MarketWatch) -- European stock markets struggled for direction on Friday, as investors tried to gauge whether a mixed report on retail sales from the U.S. will weaken or strengthen the case for the Federal Reserve to taper its asset purchases.

The Stoxx Europe 600 index was flat around 310.74, on track for a 1.5% weekly gain.

The benchmark has gained 4.5% so far in September and Atif Latif, director of trading at Guardian Stockbrokers, said that generally the equity market is in good shape as the "cyclical recovery remains on track and macro indicators are positive."

"And with global equities still trading below historical averages we remain bullish," he added.

Among notable movers in the index, shares of Kabel Deutschland Holding AG jumped 6.2% after Vodafone Group PLC (VOD) said it has secured enough shares in the German cable firm to succeed with the proposed take-over. Vodafone shares inched 0.8% higher in London.

Shares of Fresenius SE & Co. KGaA gained 4.8% after its Helios subsidiary agreed to buy 43 hospitals from Rhoen-Klinikum AG , making Fresenius Helios the largest private hospital operator in Europe, according to the release.

Shares of Rhoen-Klinikum jumped 11.6%.

Mining firms posted some of the biggest losses as metals prices broadly moved lower. Shares of Polymetal International PLC dropped 4%, Anglo American PLC fell 3.4% and heavyweight Rio Tinto PLC (RIO) (RIO) lost 2.1%.

U.S. tapering fears

More broadly, investors turned their attention away from Syria as the risk of a U.S. military strike receded. U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov were set to conclude the final day of talks in Geneva on Friday to study the proposal for Damascus to give up its chemical weapons.

Instead, market participants focused more on the U.S. Federal Reserve meeting next week, waiting to see whether the central bank will start scaling back its $85-billion-a-month-asset purchase program. Analysts speculate that recent upbeat data will make for a strong enough case for the Fed to begin the tapering process at the meeting.

Data out on Friday showed U.S. sales rose 0.2% in August -- less than Wall Street expected -- but sales July and June were revised higher.

"A rational market would respond more to the positive revisions than to the headline disappointment. The core measure which excludes cars and gas station sales was revised to its strongest monthly pace this year. This report will not dissuade the Fed from its chosen course next week," said Guy Foster, head of portfolio strategy at Brewin Dolphin.

Later in the day, University of Michigan consumer-sentiment index for September is out.

"Investors are looking to the University of Michigan to gauge whether sequestration, tapering and the slower pace of job creation are impacting ordinary household's, or whether it is only aspiring house purchasers who are finding things a bit more difficult," Foster said.

Speculation on who will succeed current Fed Chairman Ben Bernanke were also put on the table on Friday. A report by Japanese newspaper Nikkei, citing unnamed sources, said President Barack Obama plans to name former U.S. Treasury Secretary Lawrence Summers as the next chairman of the U.S. Federal Reserve board of governors possibly as soon as next week. Summers is seen as more skeptical toward quantitative easing than Janet Yellen, who had been considered one of the front-runners to become the Fed's next chief.

U.S. stock futures pointed to a higher open on Wall Street.

Among country-specific indexes in Europe, the U.K.'s FTSE 100 index fell 0.3% to 6,571.38, trimming its weekly gain to 0.4%.

France's CAC 40 index was marginally lower at 4,105.72, but was on track to gain 1.4% on the week.

Germany's DAX 30 index gained 0.1% to 8,505.88. The German benchmark was poised to close 2.8% higher on the week.

Shares of Munich Reinsurance Co. gained 2.4% in Frankfurt after J.P. Morgan Cazenove lifted the firm to overweight from neutral.

Outside the major indexes, shares of Carlsberg AS rose 1.7% in Copenhagen after Goldman Sachs lifted the brewer to neutral from sell and removed it from the pan-Europe sell list.

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