EUROPE MARKETS: Spain, Portugal Stocks Rise In Otherwise Flat Europe

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- European stocks inched up on Wednesday, with peripheral markets such as Portugal and Spain again posting the strongest gains, as investors looked ahead to regional data as well as minutes from the U.S. Federal Reserve, due later in the day.

The Stoxx Europe 600 index rose 0.1% to 329.78. The index closed at 329.40 on Wednesday, its highest closing value since May 19, 2008. The move was driven by upbeat German unemployment data and falling European borrowing costs, which were reflected in bond prices.

Among stocks on the move, shares of Akzo Nobel NV fell 2% after the Dutch painting and chemicals company said it would continue to cut costs in 2014 and kept its outlook for 2013.

Shares of Scor SE fell 3% after the global reinsurer was cut to neutral from overweight at J.P. Morgan Cazenove, where analysts said the sector is in a soft cycle that will slow earnings growth for those companies. While Scor is best-placed to offset this with lower hedging costs, the analysts said, they cut earnings-per-share forecasts for it by 8% for 2014 and 4% for 2015, and reduced dividend forecasts.

Shares of Air France-KLM SA rose nearly 5% after the airline reported a rise in passenger traffic of 2.1% and a load factor rise of 0.9 points. The unit revenue per available seat-kilometer was "resilient," the company said.

European stocks will get two more data points on Wednesday: euro-zone retail sales and German industrial production. And on Thursday, the European Central Bank holds its monthly meeting, with some speculating that ECB President Mario Draghi may have to take a dovish tone, given the single-currency zone saw another fall in inflation a day earlier.

The rally for Europe stocks on Wednesday was fueled by upbeat German employment numbers and falling borrowing costs across Europe's periphery, which helped lift the Spain IBEX 35 index to its best levels since mid-2011. The IBEX was up another 0.6% to 10,241.50 on Thursday, while the yield on Spain's 10-year government bond hovered at the lowest levels since December 2009.

Portugal's PSI 20 rose 1.3% to 7,050.11, led by a 4% rise for Banco Espirito Santo SA

Among other indexes, the German DAX 30 index fell 0.2% to 9,503.32, and the French CAC 40 index was flat at 4,264.12.

One index in the red on Wednesday was the FTSE 100 , off 0.2% to 6,738.86 The Halifax House Price index showed a drop of 0.6% in December, the first decline in a year.

Among the heavyweights, shares of British American Tobacco PLC fell 1.3%.

Away from the main indexes, shares of Mothercare PLC tumbled 28% after a profit warning. The international mother-and-baby goods retailer said worldwide network sales fell 4.4% in the 12 weeks to Jan. 4, with the U.K. hit particularly hard by promotional sales over the Christmas period. Mothercare's chief executive, Simon Calver, said the company remains cautious looking forward and full-year profits will likely be below the current range of market expectations.

U.S. stock futures were flat as investors awaited the Fed minutes of its Dec. 18 meeting, which will come after the close of European markets. The U.S. also has ADP employment data on tap for later, which precedes Friday's all-important nonfarm-payrolls data.

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