Most European Stocks Fall on U.S. Data; Adidas Declines
Thursday, 22 March 2012 | 00:00
Most European (SXXP) stocks declined as a report showed sales of previously owned U.S. houses unexpectedly fell in the world’s biggest economy.
Adidas AG (ADS) slid 2.3 percent after Morgan Stanley cut its recommendation on the stock. TeliaSonera AB (TLSN), the biggest Swedish telephone company, dropped the most since August 2011 after the Finnish government sold shares. Banco Popolare SC (BP), Italy’s fifth-biggest bank, gained after reporting earnings and a better than expected outlook for its capital position.
The Stoxx Europe 600 Index (SXXP) declined 0.1 percent to 268.67 at the close in London. The gauge still has gained 9.9 percent this year as the European (SXXP) Central Bank disbursed 1 trillion euros ($1.3 trillion) to the region’s lenders and U.S. economic data surpassed estimates. The volume of shares changing hands on the Euro Stoxx 50 Index today was 5.7 percent more than the average over the past 30 days, according to data compiled by Bloomberg.
“It’s possible we were a bit too optimistic,” said Benoit de Broissia, an analyst at KBL Richelieu Gestion in Paris, which oversees about $3.4 billion. “There are still a number of headwinds. We can’t say that residential real estate is a motor of growth for the U.S. economy at this point.”
National benchmark indexes fell in 14 of the 18 western European markets. The U.K.’s FTSE 100 rose less than 0.1 percent. France’s CAC 40 lost 0.1 percent while Germany’s DAX gained 0.2 percent.
Sales of previously owned U.S. houses unexpectedly fell in February, showing that the real-estate market is taking time to stabilize.
Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated, a report from National Association of Realtors showed today in Washington. The median forecast in a Bloomberg News survey called for a rise to 4.61 million.
Federal Reserve Chairman Ben S. Bernanke said today in a testimony to U.S. lawmakers that Europe must further strengthen its banks and that its financial and economic situation “remains difficult” even as stresses have lessened.
“Full resolution of the crisis will require a further strengthening of the European banking system,” Bernanke said in testimony to the House Committee on Oversight and Government Reform. The region’s leaders also must “increase economic growth and competitiveness and to reduce external imbalances in the troubled countries,” he said.
U.K. Chancellor of the Exchequer George Osborne said the government’s budget shortfall will be 7.6 percent of gross domestic product next year.
“Borrowing this year is set to come in at 126 billion pounds, 1 billion pounds lower than I forecast in the autumn,” Osborne said to lawmakers in Parliament in London today as he presented his annual budget.
Goldman Sachs Group Inc. said stocks will probably begin a “steady upward trajectory” over the next few years as any declines in economic growth are already reflected in share prices.
“Given current valuations, we think it’s time to say a ‘long good-bye’ to bonds, and embrace the ‘long good buy’ for equities as we expect them to embark on an upward trend over the next few years,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs in London, wrote in a report today.
Adidas, the second-largest sporting-goods maker, fell 2.3 percent to 57.64 euros. Morgan Stanley cut the shares to underweight from equal weight, meaning investors should hold a smaller proportion than represented in the benchmarks. Morgan Stanley cited risks in the second half as initiatives to fuel growth will likely mute mid-term margin expansion.
TeliaSonera fell 3.7 percent to 45.70 kronor, the biggest drop since Aug. 18, after the Finnish government sold 2.1 percent of the shares for 451 million euros, and 600 million euros of bonds to fund investments in the mining industry.
Banco Popolare gained 3.3 percent to 1.65 euros. The bank, which needs to fill a capital shortfall of 2.7 billion euros, according to the European Banking Authority, said it can meet the target without capital market transactions.
It reported a fourth-quarter net loss of 2.58 billion euros after a 2.83 billion-euro writedown of goodwill related to its merger with Banca Popolare Italiana in 2007. Excluding the writedown, profit was 250 million euros, compared with the 175 million-euro average estimate of eight analysts surveyed by Bloomberg.
Sainsbury climbed 4.5 percent to 319.3 pence. The supermarket owner reported fourth-quarter sales growth that beat estimates as the Taste the Difference food range helped the retailer close the gap on market leader Tesco Plc.
Revenue at stores open at least a year rose 2.6 percent in the 10 weeks ended March 17, the London-based company said today. The growth, reported on a basis which includes value- added tax and excludes gasoline, outpaced the 2.2 percent median estimate of six analysts surveyed by Bloomberg News.
Cap Gemini SA (CAP), France’s biggest computer-services company, increased 3.1 percent to 34.11 euros. Oracle Corp.’s “solid overall” results and upbeat comments are a “slight positive” for Cap Gemini, according to Bank of America Corp.
Ziggo NV (ZIGGO), the Dutch cable company owned by Warburg Pincus LLC and Cinven Ltd., soared 15 percent to 21.25 euros on its first day of trading. The company raised about 804 million euros selling shares at the top end of its forecast in the biggest initial public offering in Europe so far this year.
Rieter Holding AG (RIEN) sank 11 percent to 165 Swiss francs. The company said its earnings before interest and tax advanced to 112.6 million francs ($124 million) in 2011 from 75.7 million francs a year earlier, missing analyst forecasts for 123.6 million francs.
Metro AG (MEO), Germany’s biggest retailer, retreated 3 percent to 30.22 euros. HSBC cut its recommendation on the shares to “underweight.”
Game Group Plc (GMG) asked for a share suspension as the board said it is “unable to assess” the company’s financial position and finds no equity value left in the company. The stock added 0.4 percent yesterday.