U.S. GDP Boosts European Stocks, While EU Policymaker Comments Offer Mixed Signals

LONDON -- European equity markets are trading in positive territory Friday, having been somewhat mixed during the morning before better-than-expected U.S. GDP numbers helped them to small gains.

Comments from EU policymakers have continued to take the spotlight, with some support still found in the comments from European Central Bank president Mario Draghi yesterday. This was bolstered further after French newspaper Le Monde reported that the ECB is preparing to buy Spanish and Italian bonds to help alleviate the record-high yields seen on the countries' debt.

That said, the German Bundesbank did come out against the ECB's purchasing sovereign debt, believing it would be against the spirit of the central bank's statutes, which do not allow it to finance states.

With this, the German DAX (INDEX: ^GDAXI  ) is actually one of the weakest benchmark indexes on the Continent today, up around 0.2%.

As always, the following price moves are based on this morning's European trading.

Corporate earnings reports have been leading some of the largest moves again Friday, including that of chemical maker Solvay (NASDAQOTH: SVYZY.PK), which is up almost 9% in Belgium after it said strong demand for agents used in oil drilling helped earnings beat estimates. This was the second consecutive quarter Solvay's numbers came in higher than expected, and today it maintained its guidance for full-year earnings, of which it has already achieved some 52.6%.

Elsewhere, Barclays (NYSE: BCS  ) , the bank at the center of the LIBOR scandal, is up 7% in London after it reported better-than-expected earnings. First-half income climbed 13% year on year to 4.2 billion pounds, despite the inclusion of the 290 million pound fine levied against the bank for its role in LIBOR fixing. The company also apologized for "recent events," assuring that it will repair the damage done to the bank's reputation.

At the same time, Barclays has set aside a 450 million pound provision to cover costs associated with the Financial Service Authority's investigation into the mis-selling of interest rate swaps to small businesses, although it did say it expects around 100 million pounds of this to be unwound eventually.

On the downside, Cie de Saint-Gobain (NASDAQOTH: CODYY.PK) has slipped more than 11.5% in Paris after it cut its full-year outlook due to the declining economic environment in Europe. The company said it will be seeking an additional 160 million euros in cost savings in the second half as part of a larger 500 million euro attempt at full-year reductions.

Also in Paris, steel pipe producer Vallourec (NASDAQOTH: VLOWY.PK) is down 9% after it reported that second-quarter profits fell by 50%, citing reduced demand for industrial business in Europe and Brazil. Vallourec said net income dropped to 56.6 million euros from last year's 121.1 million euros, while sales increased 3% to 1.33 billion euros.

As always, this morning's European news saw some winners and losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying the stock of a prominent European large cap. If you want to know why Buffett has bought into Europe, this special Motley Fool report -- "The One European Share Warren Buffett Loves" -- reveals everything, including the price he paid. You can download the report today for free, but hurry -- the report is available for a limited time only.

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Karl Loomes does not own any share mentioned in this article. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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