EUROPE MARKETS: European Stocks Higher After Data; BASF Gains

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- European stocks pushed higher on Tuesday after euro-zone data showed another round of weak inflation and German jobless figures came in better than expected. Broker moves triggered gains for stocks such as BASF SE and Delta Lloyd NV, as well as losses for Swedish Match AB and Debenhams PLC.

Adding to earlier gains, the Stoxx Europe 600 index rose 0.4% to 328.37, led by banking and oil sectors, after seeing a drop of 0.2% on Monday.

Vestas Wind Systems AS was among the biggest movers on the Stoxx 600, up more than 6%. The wind-turbine maker upgraded its free cashflow expectations for 2013 to around 1 billion euros ($1.36 billion).

Broker moves triggered action for several companies. Shares of BASF SE added nearly 3% after UBS lifted shares to buy from neutral, saying the company should resume a re-rating trend relative to other big-cap chemical household names. UBS also cut Air Liquide SA to sell from neutral, triggering a drop of 1.3%, saying shares in the industrial-gas producer should resume underperformance versus BASF.

The German DAX 30 index was up 0.6% to 9,457.30 after data showed seasonally adjusted jobless claims in the country falling 15,000 to 2.97 million in December, which was better than expected. German retail sales data also came in better than expected, with a November preliminary rise of 1.5%.

Europe stocks also rose after data showed euro-zone inflation falling back in December, further below the European Central Bank's target.

Tom Rogers, senior economic advisor to the EY Eurozone Forecast, said the central bank will "need to remain alert to the risk of deflation, and following Thursday's Governing Council meeting, be prepared to respond to increased speculation over which policy tools it might use to try and address falling prices."

Among other stocks, Delta Lloyd NV rose 3.5% after J.P. Morgan Cazenove lifted shares to overweight from neutral, in a broad note on European life insurers. The investment bank said it's positive on the sector, as it sees increasing focus on balance-sheet strengthening, cash flows and restructuring. It said shares of Delta Lloyd, specifically, should continue to see a re-rating.

On the downside, shares of Swedish Match AB were a top decliner, off 5.4% after Citi cut it to sell from neutral, saying competition pressures in Sweden were likely to continue in 2014. It cited specific worries about the cigar sector.

A number of tech companies were affected by a note from Barclays analysts on the sector. They said they see a gradual improvement for the European technology sector, but shares of Software AG fell 3.5% after a cut to equalweight from overweight, while ST Microelectronics NV slid 2.4% after a cut to underweight from equalweight.

Shares of Severn Trent PLC fell 2% after J.P. Morgan Cazenove cut shares in the water company to underweight from neutral. It cited concerns about rising regulatory risks, and a decreasing likelihood of mergers and acquisitions activity.

Banks and oil stocks were among the biggest gainers for the Stoxx 600, boosting several indexes. The French CAC 40 index gained 0.4% to 4,243.54, with banks such as Credit Agricole SA and BNP Paribas SA up 4% and 2.3.%, respectively. Shares of Total SA (TOT) rose 0.7%.

In Frankfurt, shares of Commerzbank AG jumped 3.5%, while in London, HSBC Holdings PLC (HSBC) rose 1.5%. BP PLC (BP) gained 1%, helping drive the FTSE 100 index up 0.4% to 6,754.82.

Also in London, retailer Debenhams PLC fell 1.1% after HSBC cut it to neutral from overweight, citing a poor Christmas sales season. However, it lifted fellow retailer Next PLC to overweight from neutral, but those shares were flat.

The best performer for Tuesday so far was the Spanish IBEX 35 index , up 1.6% to 10,050.30, with Banco Santander SA (SAN) up 2.6% and BBVA SA (BBVA) up 3.7%.

Data released Monday from Markit indicated strengthening in Spain helped raise a gauge of the euro zone's services sector and the broader private sector in December.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires