European Markets Pared Their Losses Following Theresa May Speech

(RTTNews) - The European markets got off to a weak start Tuesday, but trimmed their early losses following today's highly anticipated speech by U.K. Prime Minister Theresa May. May stated that the U.K. is set for a 'hard Brexit', which implies a complete separation from the European Union. She went on to say that her country will not remain a member of the single market.

Britain will not seek to "hold on to bits of [EU] membership" and the country also will not seek to adopt models that are enjoyed by other countries, May said in a speech at the Lancaster House.

"Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out," she said as she laid out a 12-point 'Brexit' plan.

"We seek a new and equal partnership - between an independent, self-governing, Global Britain and our friends and allies in the EU," the British premier said.

The country will also not seek to remain in the single market, as it would "mean not leaving the EU at all", May said. However, the country will try to gain the "greatest possible access" to it.

May also said her government will seek a 'bold and ambitious' free trade agreement with the EU and would seek to remove all sorts of barriers possible to trade. The days of the UK making vast contributions to the EU will end, she added.

Bank of England Governor Mark Carney said economic growth driven by household consumption would slow in 2017.

Households appear to be entirely looking through Brexit-related uncertainties, Carney said at the London School of Economics on Monday. The UK economic expansion increasingly rely on consumption.

However, Carney cautioned that the past experience suggests that consumption-led growth tends to be both slower and less durable. The increase in inflation could weigh on spending.

The pan-European Stoxx Europe 600 index weakened by 0.12 percent. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 0.29 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.31 percent.

The DAX of Germany dropped 0.13 percent and the CAC 40 of France fell 0.46 percent. The FTSE 100 of the U.K. declined 1.46 percent and the SMI of Switzerland finished lower by 0.70 percent.

In Frankfurt, Beiersdorf AG increased 0.39 percent. The company reported that its organic Group sales increased by 3.2% in 2016, according to preliminary, unaudited figures. In nominal terms, sales rose by 1.0% to 6.75 billion euros from 6.69 billion euros.

Merck announced that, as of April 1, Michael Heckmeier, currently Head of the Pigments & Functional Materials business unit, will become Head of the Display Materials business unit within Performance Materials. The stock rose 0.34 percent.

Zalando sank 5.83 percent after its fourth quarter results came in weaker than expected.

In Paris, speed-train maker Alstom SA reported that its sales for third quarter 2016/17 increased by 3%, mainly fuelled by deliveries of suburban and regional trains in Europe, progress of Riyadh metro system in Saudi Arabia, PRASA project in South Africa and maintenance contract in the United Kingdom. The stock dropped 0.91 percent.

In London, British American Tobacco weakened by 3.83 percent. The company announced that it has agreed to acquire the 57.8 percent of Reynolds American that it does not already own for $49.4 billion.

Intertek Group surrendered 3.14 percent after it was downgraded to "Underperform" from "Outperform" at Credit Suisse.

Rolls-Royce climbed 5.48 percent. The company has agreed to pay 671 million pounds to settle bribery and corruption charges with UK, US and Brazilian regulators.

Europe's car registrations climbed for the second straight month in December, the European Automobile Manufacturers Association reported Tuesday. Total passenger car registrations grew 3.0 percent year-over-year in December, but slower than previous month's 5.8 percent growth.

German economic sentiment improved to its highest level in seven months in January, as expectations were boosted by a strong run of positive data towards the end of last year.

The ZEW Indicator of Economic Sentiment for Germany rose to 16.6 from 13.8 in December, the Mannheim-based Centre for European Economic Research/ZEW said Tuesday. However, economists had forecast a score of 18.4.

U.K. inflation reached its highest level in more than two years at the end of 2016 on air fares and food prices.

Consumer price inflation increased more-than-expected to 1.6 percent in December from 1.2 percent in November, the Office for National Statistics reported Tuesday. This was the highest rate since July 2014 and above the expected rate of 1.4 percent.

British house price inflation accelerated for the first time in five months in November, though marginally, figures from the Office for National Statistics showed Tuesday. The house price index climbed 6.7 percent year-over-year in November, faster than the 6.4 percent rise in the previous month.

Growth in New York manufacturing activity has seen a modest slowdown in the month of January, according to a report released by the Federal Reserve Bank of New York on Tuesday. The New York Fed said its general business conditions index edged down to 6.5 in January from a revised 7.6 in December, although a reading above 50 still indicates growth.

Economists had expected the general business conditions index to dip to 8.0 from the 9.0 originally reported for the previous month.