Europe stocks down as insurers come under pressure

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) — European stock markets traded lower in early action on Tuesday as investors appeared to cash in on gains seen from the prior session’s rally. Broker moves weighed on shares of RWE AG, Hannover Re SE and Munich Re, but lifted Burberry Group PLC and Michelin.

The Stoxx Europe 600 index XX:SXXP -0.68% fell 0.3% to 287.52, following a gain of more than 1% in the prior session, after upbeat economic data in Europe and the U.S.

Fresenius Medical Care AG & Co. KgaA DE:FME -9.59% was the biggest decliner, tumbling nearly 10%.

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Utility company RWE DE:RWE -4.22% shares fell 2.3% to 22.68 euros after Morgan Stanley cut shares to equal-weight from overweight and cut its price target to €28 from €36 a share. Analyst Bobby Chada cited a tough operating environment and higher-than-expected leverage, and said there is little scope for a power-price rebound.

Insurers were also in a negative spotlight. J.P. Morgan Cazenove said it expects a 10% decline in natural catastrophe reinsurance and sees flat rates on other reinsurer lines, and reduced its 2014 earnings-per-share estimates for key reinsurers. In light of this, Hannover Re SE DE:HNR1 -3.26% was cut to underweight from neutral, leaving shares nearly 2% lower. Shares of Munich Re DE:MUV2 -3.26% fell 0.8% as it was dropped to neutral from overweight. Swiss Re AG CH:SREN -2.55% fell 0.8% after being cut to neutral from overweight.

The German DAX 30 index DX:DAX -1.11% fell 0.4% to 7,955.32, dragged by Munich Re and Fresenius.

On the upside, shares of Burberry Group PLC UK:BRBY +3.47% rose around 4% to 1,418 pence after HSBC lifted the luxury retailer to overweight from neutral, and lifted its price target to 1,750 pence from 1,530 pence.

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Those gains helped London keep losses in check, with the FTSE 100 index UK:UKX -0.49% flat at 6,309.87.

Shares of Michelin FR:ML +1.91% added 2.4% after UBS upgraded shares to buy from neutral, saying the tire company is only part of the way towards improving its cost positions significantly. Analyst Philippe Houchois also said its more-aggressive pricing on light-vehicle tires is positive.

Those gains supported the French CAC 40 index FR:PX1 -0.65% , which kept losses to a fall of 0.2% to 3,761.09.

Analysts said traders were growing cautious ahead of central bank meetings in the U.K. and Europe on Thursday, along with all-important U.S. payrolls data later this week. U.S. stock futures pointed to gains for Wall Street later, while Australian and Japan stocks rallied. China stocks fell.

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.

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