EUROPE MARKETS: European Stocks Inch Higher After Data Deluge

By Sara Sjolin and Barbara Kollmeyer, MarketWatch

LONDON (MarketWatch) -- European stock markets pushed into the black in the last hour of trading on Wednesday, as investors brushed aside a mixed bag of U.K. labor data and downbeat U.S. housing starts.

The Stoxx Europe 600 index pared earlier losses and rose 0.1% to close at 334.94 after closing almost flat on Tuesday.

Carlsberg AS jumped 7.1% after the brewer said strong growth in Asia helped offset weakness in its Russian and Western European markets in 2013.

Swedish drug maker Meda AB surged 11% after posting a lower profit but higher sales in the fourth quarter.

Credit Agricole SA rose 2% in Paris after the bank said it swung back to a profit in the fourth quarter.

Tenaris SA fell 6.9%, the top decliner for the Stoxx 600 while, Vallourec SA lost 4.5%. Last summer, the two companies reportedly complained to the U.S. that manufacturers of steel pipes in South Korea, India and other countries were selling too cheaply in the U.S. A preliminary U.S. Commerce decision found no dumping of imports by South Korean companies, Reuters reported.

Among other notable movers in the benchmark, shares of OMV AG dropped 2.1% after Austria's biggest oil-and-gas company said production outages in Libya pushed net income lower in 2013.

Shares of ITV PLC dropped 1.4% in London after the commercial broadcaster said it has acquired a controlling stake in DiGa Vision, a New York-based independent producer of reality and scripted programming.

More broadly, U.S. housing-starts data dived 16% in January, a much sharper fall than expected as unusually cold weather in January impacted demand. After the European markets close, minutes from the Federal Reserve's latest meeting are also due. U.S. stocks opened mixed.

In Europe, data showed U.K. unemployment unexpectedly rose to 7.2% in the three months to December. Analysts expected the rate to remain at November's 7.1% or drop to 7%. Meanwhile, other data sets showed earnings growth strengthened and jobless claims declined, indicating the U.K. labor market continues to improve.

The job situation has been a major focus point in the U.K. after the Bank of England in August said it would discuss raising rates when the unemployment level dropped to a threshold of 7%. However, after a faster-than-expected drop in the jobless rate, the BOE last week revamped its forward guidance and said it will now consider a broader range of economic indicators and focus on reducing spare capacity before hiking interest rates.

Analysts said the drop in the headline unemployment rate shouldn't be a major concern, although it eases pressure on the BOE to raise rates.

Minutes from the central bank's February policy-setting meeting were also out Wednesday morning and showed the committee members voted unanimously to keep rates low and make no changes to the bond-buying program.

The FTSE 100 index closed flat at 6,796.71.

Germany's DAX 30 index pared a sharper earlier loss and also ended flat at 9,660.05 and France's CAC 40 index rose 0.2% to 4,341.10, helped by Crédit Agricole.

A Bank of America Merrill Lynch fund manager survey out Tuesday showed the euro zone as the favorite region among investors for a sixth-straight month, but John Bilton, the bank's European investment strategist, cautioned that valuations are already "fully price in the region's growth outlook."

But Peter Garnry, head of equity strategy of Saxo Bank, said Wednesday that he thinks this will be the year Europe stocks outperform the U.S., because of the "potential for tailwind and multiple expansion."

Europe stocks are also coming from a lower base, as equity indexes on average haven't gone back to previous peaks as they have in the U.S., he said.

"In the U.S., any increase from here will be driven by earnings gains and because of profit margins operating so high it has to be ultimately driven by revenue," said Garnry. "So far, that's looking OK with fourth-quarter earnings season in the U.S., but figures are not good enough to be better than multiple expansion in Europe."

Garnry is watching cyclicals, financials, industrials and materials sectors, but also added that his view is dependent on a growth recovery for Europe's economies.

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