By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets posted losses
Thursday after weaker-than-expected euro-zone gross domestic
product data confirmed the region slipped deeper into recession in
the final quarter of 2012, reminding investors of the continent's
persistent growth woes.
The Stoxx Europe 600 index closed 0.2% lower at 287.79, breaking
a two-day winning streak.
"There was a mentality where people were going along with
optimism, which happens when sentiment runs ahead of fundamentals.
And then it suddenly hits people that things are not fine in the
euro zone and the GDP was a trigger for that today. It's a reality
check," said Alastair Winter, chief economist at Daniel Stewart
Securities.
"It's not all doom and collapse, but it's not good either and
how can you be buying shares if you don't think the companies are
making profits. But there are always some good companies in Europe
and some of them will be cheap because of this," he said.
Shares of troubled lender Bankia SA sank 12%. Spain's bank
bailout fund said Bankia's shareholders face considerable losses,
as restructuring efforts could end in a "significant reduction" in
nominal value of the shares.
Shares of Nestle SA dropped 2.3% after the maker of Nescafe and
Kit Kat bars reported slower organic growth for 2012 compared with
last year. Sales in the U.S. and Europe were hurt as consumers
tightened their spending. .
Shares of Anheuser-Busch InBev NV jumped 5.9%. The beer giant
and competitor Constellation Brands Inc. (STZ) said they agreed on
revised terms for AB InBev's full divestiture of the U.S. assets of
Mexican peer Grupo Modelo SAB de C.V. (GPMCY). .
KBC Group NV rallied 6.5%, as the Belgian banking and insurance
firm said it declared an annual dividend of 1 euro per share
($1.33)
Euro-zone GDP slumps
Elsewhere, growth data for the euro zone claimed attention. The
European Union statistics agency Eurostat said the economy across
the 17-nation shared-currency bloc shrank 0.6% in the fourth
quarter of 2012, compared with analysts' expectations of a 0.4%
decline. .
In Germany, gross domestic product for the fourth quarter shrank
0.6%, while economic activity in France shrank 0.3% in the quarter.
Both readings were weaker than expected, stoking fears of a new
recession in those countries. .
"The bigger shock is Germany. There has been all these surveys
indicating that everything was fine, but it's not going fine. But
we could start seeing an improvement as surveys are indicating that
German business folks are feeling more optimistic," Winter from
Daniel Stewart said.
"You should be worried about France. The problem is the
unemployment there and if they seriously are going to cut public
spending," he said.
Stocks in Europe briefly trimmed losses in afternoon action,
after jobless-claims data from the U.S. showed 27,000 fewer people
applied for unemployment benefits last week, bringing the total
number of first-time claims to 341,000. .
U.S. stock opened lower on Wall Street. .
Movers
Closer to home, shares of Renault SA rallied 7.7% after the car
maker posted a drop in 2012 profit but predicted that global auto
sales will continue to grow this year. .
Shares of Electricite de France SA gained 5%. The
state-controlled power group reported full-year profit that topped
expectations and said it plans to cut costs as much as EUR1 billion
euros this year. .
Banks, however, were on the decline in France, with shares of
Société Générale SA down 3.5% and Credit Agricole SA off 1.9%.
France's CAC 40 index dropped 0.8% to 3,669.60.
The U.K.'s FTSE 100 index slumped 0.5% to 6,327.36. Shares of
Barclays PLC (BCS) lost 2.2%, after Investec Securities cut the
bank to hold from buy. .
Shares of Rio Tinto PLC (RIO) lost 0.3% after the miner swung to
its first full-year loss but affirmed plans to cut costs by at
least $5 billion by the end of 2014. .
Germany's DAX 30 index shaved off 1.1% to 7,631.19, with
Deutsche Bank AG (DB) 1.2% lower.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires