European Stocks Retreat as Greece Will Hold New Election
Wednesday, 16 May 2012 | 00:00
European stocks dropped for a second day as Greece called a new election after the country’s politicians failed to form a government.
Banks (SXXP) posted the biggest contribution to the Stoxx Europe 600 Index’s decline. Julius Baer Group Ltd. (BAER) plunged 6.1 percent, its biggest slide in eight months, as revenue from assets under management fell in the first four months of the year.
The Stoxx Europe 600 Index retreated 0.8 percent to 245.45 at 4:30 p.m. in London, extending its drop from this year’s peak on March 16 to 9.9 percent. The gauge swung between gains and losses at least nine times earlier today. The Stoxx 600 yesterday slumped to its lowest level since Jan. 9.
“Equities look cheap, but we all know why,” Didier Saint- Georges, a member of the investment committee at Carmignac Gestion, which oversees about 50 billion euros ($64 billion), said at a presentation in London today. “Valuations are not necessarily pointing to any clear direction. For Europe, you just don’t need growth, but also very profound adjustments both fiscal and external, and that won’t happen quickly.”
National benchmark indexes fell in every western-European market except Norway and Iceland. The U.K.’s FTSE 100 lost 0.6 percent and France’s CAC 40 lost 0.7 percent. Germany’s DAX retreated 0.9 percent. Greece’s ASE Index plunged 3.6 percent to its lowest level since November 1992.
Greece will hold its new vote as early as next month. Polls showed that the anti-austerity Syriza group could win the ballot. The failure to form a government committed to austerity has reignited concern that the country will leave the euro area.
Greece will repay 435 million euros of foreign-law bonds falling due today which weren’t tendered in the country’s debt restructuring, the Athens-based Finance Ministry said in an e- mailed statement . The repayment won’t prejudice future decisions on other untendered bonds, the ministry said.
Gross domestic product in the 17-nation euro area stagnated in the first quarter compared with the final three months of 2011, the European Union’s statistics office in Luxembourg said today. The median forecast of economists surveyed by Bloomberg had called for a 0.2 percent contraction. Germany’s economy expanded 0.5 percent, compared with the 0.1 percent median estimate of economists in a separate survey.
International Bailout’s Terms
Germany’s Finance Minister Wolfgang Schaeuble said Greece must elect a government that sticks to the terms of its international bailout if it wants to stay in the euro.
“If Greece - and this is the will of the great majority - - wants to stay in the euro then they have to accept the conditions,” Schaeuble told reporters at a meeting of European Union finance ministers in Brussels. “Otherwise it isn’t possible. No responsible candidate can hide that from the electorate.”
The Stoxx 600 lost 1.8 percent yesterday as Greece moved closer to a possible exit from the euro area, European industrial output slipped in March and German Chancellor Angela Merkel’s party lost a state election.
The volume of shares changing hands on the Stoxx 600 was 13 percent higher than the average over the last 30 days, according to data compiled by Bloomberg.
In the U.S., a Commerce Department report showed that retail sales increased 0.1 percent in April. That matched the median forecast by 80 economists surveyed by Bloomberg. Sales advanced 0.8 percent in March.
UniCredit, Intesa Sanpaolo
UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP), the biggest Italian lenders, declined 5.5 percent to 2.53 euros and 5.5 percent to 97.65 euro cents after Moody’s Investors Service cut the credit ratings of 26 of the nation’s lenders, citing weakened earnings and the domestic economic outlook.
Julius Baer slumped 6.1 percent to 32.11 Swiss francs after the Swiss wealth manager established in 1890 reported that its gross margin, a measure of profitability, was “slightly below” 100 basis points over the period, compared with 105 basis points in 2011. A basis point is one-hundredth of a percentage point.
FLSmidth & Co. A/S tumbled 8.4 percent to 319 kroner after the biggest maker of cement kilns posted net income and revenue that missed analysts’ estimates. The Copenhagen-based company reported first-quarter profit of 241 million kroner ($41.4 million) and sales of 5.15 billion kroner. Analysts surveyed by Bloomberg had predicted profit of 338 million kroner and sales of 5.55 billion kroner.
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