Disappointing Earnings Hit Europe's Markets

By TOBY ANDERSON

European stocks closed lower Tuesday, with poor earnings dragging the already jittery banking and basic resource sectors lower.

The dollar gained against the euro and yen, while gold prices eased and oil prices rose.

The pan-European Stoxx 600 Index closed down 0.2% at 266.92. The U.K.'s FTSE 100 slipped 0.8% to 5707.3, France's CAC-40 lost 0.5% to 3852.66, and Germany's DAX declined 0.4% to 6613.8. In the U.S., the Dow Jones Industrial Average was little changed at midsession.

UBS, the Swiss banking giant, said it saw improvements at its private bank, but the investment bank struggled during the third quarter. Its shares fell 5% and the Stoxx Europe 600 banks index closed 1.2% lower.

Among basic resources shares, ArcelorMittal, the world's largest steelmaker, soured the mood when it issued a lower fourth-quarter outlook due to weak steel prices. Its shares fell 5% and the Stoxx Europe 600 index basic resource index fell 0.4%.

In the U.S., consumer confidence rose in October, according to the Conference Board, but remained close to historic lows. The Case-Shiller home price index fell 0.2% in August. That was the first drop in the index after four straight monthly gains.

The dollar's strong performance didn't help the greenback against the British pound. After the U.K. reported preliminary third-quarter growth of 0.8%—about twice expectations—sterling rallied to $1.5896 from $1.5736.

Late in Europe, the euro was at $1.3863, down from $1.3970 late Monday in New York. The dollar was at 81.34 yen up from 80.81 yen. (Fonte: Wall Street Journal)

Gold for December delivery on the Comex division of the New York Mercantile Exchange fell $4.80 to $1334.10. Light, sweet crude for December delivery rose 25 cents to $82.77.

On Wednesday, Germany will publish preliminary consumer price index data for October, while in the U.S. there will be more housing data with new home sales figures for September due at 1400 GMT. Before that at 1230 GMT are durable-goods orders.

In major market action: In the wake of UBS's earnings news, other banks were lower. Shares of Deutsche Bank dropped 1.6% in Germany and in Paris BNP Paribas fell 0.5%.

Shares of Danish alternative-energy firm Vestas Wind Systems fell more than 10% in Copenhagen. The company on Tuesday said it would cut 3,000 employees and warned that the outlook for the 2011 wind market would be weaker than expected.

In London, shares of Cairn Energy tumbled 7.2% after the company said it discovered no energy at two wells in Greenland and would write off the $185 million of related costs.

It is the third disappointment in a "mixed campaign" in the Baffin Bay region, said analysts at Killik & Co., who advised steering clear of Cairn shares for now. They added, though, that Cairn is in the early stages of a long-term exploration program across a big area in Greenland that could still offer hydrocarbon discoveries.

Miners also gave back some gains from the prior session and tracked falling commodity prices. Shares of Eurasian Natural Resources fell 2.1%, Antofagasta and BHP Billiton fell 2.5%.