European Stocks Mixed as Peripherals Outperform Core

LONDON -- European equity markets are seeing a mixed session Tuesday, with peripheral countries outperforming core nations as Spanish and Italian bond yields hit the lowest point in five months thanks to confidence that the ECB will intervene if necessary. The Labor Day holiday in the U.S. yesterday had investors on both sides of the pond waiting for Wall Street to open, looking for a catch-up bounce following a generally strong performance in Europe yesterday. And all eyes are on today's U.S. manufacturing report, looking for signs of growth.

On the continent, Spain's IBEX (INDEX: ^IBEX  ) is the best-performing benchmark index, up 1.3%.

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

The telecommunications majors are seeing some strong moves today, with Vodafone (Nasdaq: VOD  ) down more than 2% after broker Sanford C. Bernstein downgraded its stock. This followed news that the company is set to win EU approval with its joint-venture partners, Telefonica (NYSE: TEF  ) and Everything Everywhere, to introduce a new mobile-payment platform that should allow quick and easy payment using smartphones. Rumors abound that the European Commission is set to give unconditional approval of the venture following an investigation to see whether it would crowd out competitors and other "mobile wallet" services.

In a move counter to Vodafone, Telefonica has actually gained on the news, climbing almost 4%. Telefonica, which operates under the name O2 in the U.K., suffered last month after the U.K. gave approval for the Everything Everywhere group to be the first mobile-phone operator to introduce 4G networks, it them a clear competitive advantage over rival firms such as Telefonica. This latest news of approval and a forthcoming alliance now offers investors hopes that the Spanish giant will again be able to make headway into this new, up-and-coming market.

Away from telecoms, Dutch supermarket operator Koninklijke Ahold (NASDAQOTH: AHONY.PK) is up almost 5% today after it said it may sell its 60% stake in Scandinavian retailer ICA. The company said it was considering a number of options for the sale of its ICA stake, including an initial public offering in Stockholm, suggesting it will work closely with investment firm Hakon Invest, which shares ICA ownership, over the next 12 months to determine the best method.

In Germany, automakers are seeing some of the most dire performance, with Volkswagen (NASDAQOTH: VLKAY.PK) leading losses, down more than 3%. This comes despite news that the company raised 500 million euros by floating two-year notes today, and after the company said its factory in Slovakia raised first-half output by 122%. The Slovak unit increased output as new models and sport-utility vehicles allowed it to assemble almost the same number of cars as it did in all of 2011.

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. Motley Fool newsletter services have recommended buying shares of Vodafone Group. 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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