9-4-13 10:45 AM EDT | Email Article
 

By Sara Sjolin, MarketWatch

 

LONDON (MarketWatch) -- European stock markets headed for a second day of losses on Wednesday on heightened fears of a U.S. intervention in Syria, after U.S. President Barack Obama secured more support in Congress for a military strike.

 

The Stoxx Europe 600 index gave up 0.1% to 301.61, adding to a 0.4% loss from Tuesday.

 

Posting the biggest loss in the index, shares of Ryanair Holdings PLC sank 13% after the budget airliner warned full-year profit will be at the lower end of its target range of 570 million euros ($750 million) to EUR600 million. It also cut its full-year traffic target from over 81.5 million to under 81 million.

 

Other airlines were also weaker, with shares of Easyjet PLC down 4.9%, International Consolidated Airlines Group SA off 0.8%, and Deutsche Lufthansa AG losing 4.4%.

 

More broadly, investors continued to monitor developments in the Syria conflict for signs that the West will launch a military strike in response to allegations the Syrian government used chemical weapons against civilians. U.S. President Barack Obama said over the weekend that a strike against Syria is necessary, but that he would seek approval from Congress before authorizing any use of force.

 

On Tuesday, the White House secured more backing for a strike as a range of congressional leaders, including House Speaker John Boehner, said they support the call for an intervention.

 

In addition, the leaders of the Senate Foreign Relations Committee reached agreement on a resolution authorizing military strikes against Syria, giving Obama 60 days to take action. The resolution is expected to be put to a vote on Wednesday.

 

"Thus, investors should look out for any signs of volatility until at least September 9, when the U.S. congress reconvenes and the markets receive more information as to officials' intentions towards Syria," said Shavaz Dhalla, financial trader at Spreadex, in a note.

 

U.S. stocks traded higher on Wall Street.

 

Europe data

 

Back in Europe, the U.K.'s FTSE 100 index traded slightly lower at 6,467.69, while Germany's DAX 30 index fell 0.1% to 8,170.09. France's CAC 40 index lost 0.4% to 3,960.08.

 

The losses came even as fresh data confirmed the recent positive trend in data for Europe.

 

In the U.K., Markit/CIPS said British business activity jumped to a more than six-and-a-half-year high, with the services purchasing managers' index rising to 60.5 in August.

 

Meanwhile in the euro zone, retail sales for the region picked up slightly in July, while the second estimate of GDP growth confirmed the economy grew 0.3% in the second quarter.

 

The data came a day ahead of the European Central Bank's interest-rate decision with most analysts expecting the bank to keep monetary policy on hold.

 

Ishaq Siddiqi, market strategist at ETX Capital, said in a note that the ECB will "take notice in the improving trend of euro-area economic data with chief Mario Draghi tomorrow likely to express his optimism around the recovery, but staying on the dovish side of things by maintaining the low-rate interest rate environment."

 

"Draghi is also likely to indicate that the ECB has no intention of digging into its magic toolbox to stimulate the economy at the moment and will most likely be pressed by the media about perhaps providing some clear thresholds on the central bank's most recent forward guidance framework," he added.

 

The Bank of England will also announce its latest policy decision on Thursday and no changes are expected there either.

 

Italy uncertainty

 

Italy's FTSE MIB index dropped 1.5% to 16,690.89 on renewed worries of instability in the government. Italian media reports said former Prime Minister Silvio Berlusconi was threatening to withdraw support for the governing coalition, according to Reuters. The uncertainty comes ahead of a possible vote on whether to evict Berlusconi from the Senate after a tax fraud conviction.

 

Banks were lower in Milan, with shares of UniCredit SpA off 2.4% and Intesa Sanpaolo SpA 2.1% lower.

 

Among other notable movers in Europe, Belgian food retailer Delhaize Group SA lost 6.7% after the company it has appointed Frans Muller as chief executive, effective November 8, to succeed Pierre-Olivier Beckers.

-Sara Sjolin; 415-439-6400; AskNewswires@dowjones.com

 

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


(END) Dow Jones Newswires

09-04-13 1045ET

Copyright (c) 2013 Dow Jones & Company, Inc.
Copyright 2014 MarketWatch
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