11-19-13 8:43 AM EST | Email Article

By Sara Sjolin, MarketWatch


LONDON (MarketWatch) -- European stock markets dropped on Tuesday, retreating from multiyear highs after a gauge of German economic confidence fell short of expectations.


The Stoxx Europe 600 index gave up 0.6% to 322.77 after closing at the highest level since May 2008 on Monday.


"We are past the earnings season and now we're back to discounting everything that has to do with monetary policy and the macro economy," said Peter Garnry, head of equity strategy at Saxo Bank.


"If the stock market wants to continue to go higher next year, it has to be at the backdrop of a stronger economy. It's pivotal whether the economy is strengthening or slowing down and leading indicators point to a re-acceleration of growth," he added. But with most European markets up more than 20% over the past 12 months, he cautioned that a small bubble could be forming in the short term.


German data


The broader markets stayed in negative territory on Tuesday after the German ZEW indicator of economic sentiment for November came in lower than expected, although it did climb to its highest level since October 2009. The index rose 1.8 points to 54.6, slightly below the 55 points expected by analysts. Read: Checking Europe's vital signs in the week ahead


Germany's DAX 30 index dropped 0.3% to 9,193.69 on Tuesday after closing at an all-time high on Monday. France's CAC 40 index lost 1.1% to 4,273.08, and the U.K.'s FTSE 100 index gave up 0.5% to 6,690.87.


Shares of K+S AG lost 3.9% in Frankfurt after Standard & Poor's Ratings Services lowered the long-term credit rating on the German potash maker to BBB from BBB+.


Shares of EasyJet PLC jumped 8.2% after the budget airline posted a 51% rise in fiscal 2013 pretax profit, driven by a 11% increase in revenue.


Shares of Royal KPN NV climbed 1.9% after Credit Suisse lifted the Dutch telecom firm to outperform from neutral.


Banks posted some of the biggest losses, with shares of Commerzbank AG off 0.9% in Frankfurt, Royal Bank of Scotland Group PLC (RBS) 1.2% lower in London and BNP Paribas SA down 1.4% in Paris.


Shares of Intertek Group PLC gave up 3.9% in London after the product-testing and certification company said it will buy Architectural Testing Inc. for $95 million.


Shares of Thomas Cook Group PLC climbed 4% after the travel agent said it sold the majority of its interests in The Airline Group Ltd., a shareholder in U.K. Air Traffic controller NATS Holdings Ltd., for 38 million pounds ($61.20 million) in cash.

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


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11-19-13 0843ET

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Morningstar - 2013/11/19 - UPDATE: European stocks fall from multiyear highs
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