European Stocks Are Little Changed as U.S. Data Outweigh Greece
Friday, 17 February 2012 | 00:00
European (SXXP) stocks were little changed, paring earlier losses, as better-than-estimated U.S. economic data outweighed a delay in the bailout of Greece.
Banco Santander SA led Spanish lenders lower after the nation’s regulator removed a ban on short sales of financial shares. ABB Ltd. (ABBN) tumbled 3.6 percent after earnings missed estimates. Renault SA rose 4.5 percent after posting 2011 free cash flow that exceeded the company’s target.
The Euro Stoxx 50 Index dropped 0.2 percent to 2,489.35 at the close of trading. Stocks pared earlier losses of as much as 1.6 percent after U.S. housing, manufacturing and jobless claims data beat estimates. The gauge has still rallied 7.5 percent this year amid optimism that the euro area will contain its debt crisis and as the U.S. economy continued its recovery.
“Greek concerns appear to be weighing down on markets,” said Peter Dixon, global equities economist at Commerzbank AG. “It’s beginning to look as though the end game may be a lot more messy than anticipated. A Greek exit is certainly no longer off the table,” he said, referring to the possibility of the nation leaving the currency union.
Europe’s creditor countries struggled to reach an agreement over a rescue of Greece, seeking more control over how future aid is spent as the country faces the threat of default over a bond payment due on March 20. Policy makers will discuss a second bailout on Feb. 20.
Claims for jobless benefits in the U.S. fell unexpectedly last week to the lowest level in four years, Labor Department figures showed today. First-time applications decreased in the week ended Feb. 11 to 348,000, less than the median estimate of 365,000 in a Bloomberg News survey.
Housing starts rose 1.5 percent to a 699,000 annual rate, another report showed. That beat the median estimate in a Bloomberg News survey of 675,000. A third report showed that manufacturing in the Philadelphia region expanded in February at the fastest pace in four months as new orders and sales picked up.
Moody’s said it is reviewing the credit ratings of 17 banks and securities firms with capital-markets operations, which may result in downgrades. The announcement comes days after the company cut the ratings of six European (SXXP) nations including Spain and lowered its outlook on France.
National benchmark indexes declined in 9 of the 18 western European markets today. France’s CAC 40 gained 0.1 percent, while Germany’s DAX lost 0.1 percent each. The U.K.’s FTSE 100 slipped 0.1 percent. Spain’s IBEX 35 Index fell 2.1 percent.
Spain and France today sold 14.2 billion euros ($18.5 billion) in their first auctions since the euro-area downgrades by Moody’s, getting more demand than the amount they offered. The yield on France’s benchmark two-year notes fell, while Spanish borrowing costs rose.
Spain’s stock-market regulator lifted a six-month ban on short-selling of financial stocks. France and Belgium also eased restrictions this week.
Banco Santander SA lost 2.6 percent to 6.29 euros, while Banco Bilbao Vizcaya Argentaria SA slid 4.1 percent to 6.80 euros. Bankia SA tumbled 7.3 percent to 3.09 euros.
ABB fell 3.6 percent to 19.20 Swiss francs. The world’s largest maker of power-distribution equipment reported less- than-expected profit in the fourth quarter and said price pressure may weigh in on profitability in the first quarter.
Rio Tinto, Axa
Rio Tinto Group slid 1.3 percent to 3,633.5 pence as copper fell a fifth straight session, heading for its longest slump since November.
Axa, Europe’s second-largest insurer, declined 1.3 percent to 12.06 euros. The company posted an 82 percent drop in second- half profit, after it didn’t repeat a gain from an asset disposal in the first half and witnessed lower sales of life- insurance products.
BAE Systems Plc dropped 2.3 percent to 325.2 pence after forecasting that sales growth will stagnate this year. Europe’s largest defense company said the U.K. market will fail to grow in 2012 and that U.S. defense budget cuts will create “uncertainty” in coming years.
Nestle, the world’s biggest food company, climbed 2.1 percent to 55.60 francs after posting 2011 sales growth that beat analyst estimates and forecast higher 2012 earnings as it introduces new products.
Cap Gemini SA, France’s biggest computer-services company, rose 7.9 percent to 31.66 euros after it forecast higher operating profit margin this year.
Renault, France’s second-largest carmaker, advanced 4.5 percent to 37.83 euros as it reported 2011 free cash flow of 1.08 billion euros, exceeding its previously set target.
Natixis SA said Renault’s cash flow is a “very good surprise” and there is a “night-and-day” difference between the performances of Renault and PSA Peugeot Citroen. Renault’s earnings and cash flow outperformed those of Peugeot.
Peugeot declined 1.7 percent to 13.82 euros.