MW: Europe edges lower after German election, G20 meeting
Crucell gains as Solvay loses ground on pharma-sector deals; Wolseley rallies
LONDON (MarketWatch) -- European stocks edged lower Monday, pressured after leaders from the world's largest economies didn't set forth specific economic and banking-system reforms, though German utility giants posted sharp gains in the wake of business-friendly election results.
The Dow Jones Stoxx 600 index (ST:SXXP 238.86, -0.09, -0.04%) declined 0.3% to 238.33, with mining shares such as Rio Tinto (UK:RIO 2,581, -49.50, -1.88%) , (RTP 165.70, -2.19, -1.30%) , down 2.6%, clocking losses as most metal futures slipped.
Asian equity markets traded lower to start the week, while U.S. stock futures pointed toward mild opening gains on Wall Street. See Asia Markets. See Indications.
During a two-day summit in Pittburgh, Group of 20 leaders once again stopped short of delving into the tricky specifics of reforms and laid out a timetable for work that lasts months and years in the future. See full story.
"Given the G20's failure to take concrete steps and the lack of enforcement mechanisms, the meeting could prove a disappointment to investors," said currency strategists at Citigroup.
Philip Shaw, strategist at Investec Securities, said that investors were pulling back a bit from risk-taking across most financial asset classes on Monday.
"There seems to be a bit of a rebound in the dollar and the yen. They have tended to do pretty well when markets are feeling more risk averse," he said.
Any decline in appetite for buying stocks would follow a 15.8% rise so far this quarter for the pan-European Stoxx 600.
"Although recent inflows could be interpreted as exuberant, when set against the very high cash position held by euro area households earlier in the year, recent flows towards equities do not suggest a market in imminent danger of a sharp correction," said equity strategists at Nomura.
At the regional level, the German DAX index (DX:DAX 5,634, +53.30, +0.95%) rose 0.8% to 5,627.20, boosted by gains from utility firms RWE (DE:RWE 63.92, +1.62, +2.60%) , up 2.9%, and E.On (DE:EOAN 29.20, +0.77, +2.71%) , up 3.6%.
However, the U.K.'s FTSE 100 index (UK:UKX 5,090, +8.25, +0.16%) lost 0.1% to 5,076.00 and the French CAC-40 index (FR:PX1 3,742, +2.56, +0.07%) fell 0.1% to 3,734.38.
The German gains followed an election victory for incumbent Chancellor Angela Merkel, who is now likely to form a center-right parliamentary coalition. Read more on German election.
Nukes and drug deals
"A new coalition formed by conservatives and liberals is now likely to extend the lifetime of nuclear power plants in Germany," said credit analysts at UniCredit.
"As a nuclear power plant has very little variable cost, a transfer to other fuel sources or power purchases could have led to a massive decline in cash flows on the magnitude of several billion euros. Furthermore, the early phase-out might have led to higher cash outflows for the decommissioning of the plants," they added.
Other notable moves in Europe were mainly concentrated in the pharmaceutical sector, with Crucell (NL:CRXL 16.35, +0.45, +2.79%) higher but Solvay (BE:SOLB 72.97, -1.76, -2.36%) trading lower.
Shares of Crucell rose 3.1%, gaining as the Dutch biopharmaceutical firm signed a wide-ranging deal with U.S. blue chip Johnson & Johnson (JNJ 60.62, -0.10, -0.16%) .
The companies will jointly focus on the discovery, development and commercialization of monoclonal antibodies and vaccines for the treatment and prevention of influenza and other diseases. J&J also purchased 14.6 million newly issued shares of Crucell, or around 18% of its shares, for 301.8 million euros. See full story.
Meanwhile, Solvay's shares declined 1.8%, paring some sharp recent gains made amid speculation that a bidding war will develop for its pharmaceutical division.
On Monday, Solvay agreed to sell the division to Abbott Laboratories (ABT 47.33, +0.39, +0.83%) for 4.5 billion euros ($6.6 billion) in cash.
Solvay could receive milestone payments of up to 300 million euros if certain sales targets are met, and Abbott's also assuming around 400 million euros of liabilities. See full story.
Also on the move, shares of Wolseley (UK:WOS 1,448, +142.00, +10.85%) jumped 9.6% in London.
The building-materials firm reported a sharp drop in debt and better-than-expected underlying results.
