EUROPE MARKETS: Stoxx 600 Extends Gains To Six-year High; Novo Rallies

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Most European stock markets closed lower on Tuesday, weighed by companies such as Vivendi, BASF and Fresenius dropping after earnings reports, while the benchmark index nudged a late-session rise spurred by a positive trading mood in the U.S.

The Stoxx Europe 600 index rose 0.1% to end at 338.39, closing at the highest level since January 2008. The benchmark wobbled around in red territory for most of the trading day, but started moving higher right before the close as U.S. markets trended higher.

Shares of Novo Nordisk AS (NVO) helped lift the pan-European index, rallying 5.9% to an all-time closing high after J.P. Morgan Cazenove lifted the insulin maker to overweight from underweight. The analysts said the Danish company is likely to gain market share over the long term, but that it is not reflected in the current valuation.

Shares of Jyske Bank AS jumped 10.5% after the Danish bank said late Monday it has agreed to merge with unlisted mortgage-credit institution BRFkredit.

Several prominent companies weighed on the index, however, after reporting earnings. Shares of Fresenius SE & Co. KGaA slid 4.2% after the health-care firm laid out its 2014 outlook, which was markedly below market forecasts.

Shares of Vivendi SA dropped 1.1% after the French telecoms and media firm said sales continued to suffer at the group's French phone business, SFR, last year.

HSBC Holdings PLC (HSBC) lost 1.4% after Citigroup cut the heavyweight bank to neutral from buy following the company's disappointing earnings report out on Monday.

In data news in Europe, the second print on German gross domestic product released Tuesday showed the economy expanded by 0.4% in the fourth quarter, in line with analyst expectations and the preliminary estimate.

In France, a report Tuesday from statistics bureau Insee showed business confidence remained steady in February, at the same level recorded in the two previous months. Business confidence for Germany brightened for a fourth straight month in February, data showed on Monday.

The most anticipated data release this week is the euro-zone report on consumer prices out on Friday, which could add more pressure on the European Central Bank to ease policy further at its meeting on March 6. Some analysts expect annual inflation dropped to 0.6% in February, highlighting concerns that the region may be heading for deflation.

Former European Central Bank President Jean-Claude Trichet said on Monday that deflation is a "potential new challenge" for Europe, with the real threat looming if inflation expectations become un-anchored. He stressed, however, that Europe seems to have well-anchored expectations, but "that does not mean that you do not have to be very careful permanently."

That view was also echoed in the in the European Commission's economic forecasts published on Tuesday, where economists warned that the risk of deflation could sabotage Europe's recovery.

In the U.S., data on Tuesday showed the pace of U.S. home-price growth slowed down at the end of 2013, declining for a second month. Meanwhile, the Conference Board's consumer confidence index fell to 78.1 in February from 79.4 in January, based on reduced expectations for the months ahead.

Among country-specific indexes in Europe, the U.K.'s FTSE 100 index lost 0.5% to 6,830.50, after closing at its highest level since 1999 on Monday.

Germany's DAX 30 index fell 0.1% to 9,699.35, and France's CAC 40 index gave up 0.1% to 4,414.55.

Heavyweight BASF SE dropped 0.2% in Frankfurt after the chemicals firm said it expects earnings to increase only slightly this year as it faces a patchy economic recovery.

Mining firms dropped in London as most metals prices declined. Shares of Rio Tinto PLC (RIO) dropped 2.8%, BHP Billiton PLC (BHP) fell 1.6%, and Glencore Xstrata PLC (GLCNF) erased 0.7%.

Outside the main indexes, shares of Ashmore Group PLC slid 6.5% after the emerging-markets asset manager reported a drop in fiscal half-year earnings.

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