European Stocks Decline as U.S. Payrolls Miss Forecasts
Saturday, 07 July 2012 | 00:00
European stocks extended declines for a third day as payrolls in the world’s biggest economy increased less than forecast in June.
PSA Peugeot Citroen retreated 7.7 percent after it said sales dropped in the first half. Banco Bilbao Vizcaya Argentaria SA (BBVA) slid 5.1 percent after HSBC Holdings Plc downgraded its shares. Air France-KLM gained 4.4 percent after reporting higher passenger traffic and an agreement with unions on cutting staff.
The Stoxx Europe 600 Index (SXXP) lost 1 percent to 254.41 at the close in London. The equity benchmark still advanced 1.3 percent this week, its fifth straight week of gains and its longest winning streak since January. The gauge has climbed 8.8 percent from this year’s low on June 4 amid speculation that central banks would ease monetary policy.
“It seems that the markets are expecting another round of quantitative easing in order to continue their upward momentum,” said Theodore Krintas, managing director of Attica Wealth Management in Athens. “The jobs figures will add to the uncertainty over the coming week.”
Employers in the U.S. hired fewer workers than forecast in June, showing the labor market is making scant progress toward reducing joblessness.
Payrolls rose 80,000 last month after a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 gain, according to the median estimate in a Bloomberg News survey.
The unemployment rate held at 8.2 percent. Private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months.
German industrial output rebounded more than economists forecast in May as construction buttressed Europe’s largest economy against the sovereign debt crisis.
Production rose 1.6 percent from April, when it dropped 2.1 percent, the Economy Ministry in Berlin said today. Economists forecast an increase of 0.2 percent, the median of 36 estimates in a Bloomberg News survey shows. Production was unchanged from a year earlier when adjusted for working days.
Spanish industrial production fell for the ninth month in May as the recession in the euro area’s fourth-largest economy worsened amid rising borrowing costs.
Output at factories, refineries and mines adjusted for the number of working days fell 6.1 percent from a year earlier, after an 8.3 percent decline in April, the National Statistics Institute in Madrid said today. That was less than the median forecast for an 8.1 percent contraction in a Bloomberg survey.
National benchmark indexes fell in 16 of the 18 western- European markets. Germany’s DAX and France’s CAC 40 each declined 1.9 percent. The U.K.’s FTSE 100 lost 0.5 percent.
Peugeot (UG), Europe’s second-largest carmaker, slid 7.7 percent, the most since November, to 7.08 euros. The company said first-half sales declined to 1.62 million trucks from 1.86 million a year earlier as demand slumped in European markets.
Bayerische Motoren Werke AG (BMW), the biggest maker of luxury cars, fell 4.6 percent to 56.42 euros after Morgan Stanley downgraded the stock to equalweight, the equivalent of hold, from overweight. Daimler AG fell 3.3 percent to 35.34 euros while Fiat SpA (F) dropped 5.3 percent to 4.05 euros. A gauge of automakers posted the biggest drop of the 19 industry groups on the Stoxx 600.
Delta Lloyd NV (DL) fell 4.4 percent to 11.09 euros after Aviva Plc (AV/) sold 37 million shares in Dutch insurer, cutting its stake below 20 percent. Aviva increased the number of shares sold from an initial target of 25 million.
The share sale was part of a plan by Aviva, the U.K.’s second-biggest insurer by market value, to exit almost a third of its units to bolster capital reserves and limit the impact of further turmoil in the euro region. Aviva said the shares sold were priced at 10.75 euros apiece, giving gross cash proceeds of 318 million pounds ($494 million), and were several times oversubscribed. Aviva rose 1.2 percent to 288 pence.
Brenntag AG (BNR) slid 4.4 percent to 87.75 euros, after five days of gains. Shareholder Brachem Acquisition S.C.A. sold its entire stake of 6.9 million shares in the German chemicals company.
BBVA tumbled 5.1 percent to 5.18 euros after HSBC downgraded the stock to neutral from overweight, meaning investors shouldn’t buy more of the shares. Banco Popular Espanol SA (POP) slid 4.1 percent to 1.63 euros, dropping for a fifth day. HSBC cut the stock to underweight from neutral, meaning investors should reduce their holdings.
Italian lender UniCredit SpA (UCG) slipped 5.4 percent to 2.66 euros and Portugal’s Banco Espirito Santo SA lost 4.4 percent to 54 euro cents as European bank shares declined.
Software AG (SOW) and SAP AG (SAP) slid 5.7 percent to 23.51 euros and 4.4 percent to 45.55 euros, respectively. Software companies will probably lower full-year forecasts amid negative macro- economic data, Berenberg Bank analysts Daud Khan and Jean Beaubois wrote in a note. Temenos Group AG (TEMN), a maker of banking software, dropped 4.3 percent to 14.65 Swiss francs.
Carillion Plc (CLLN), builder of the 255 million-pound ($400 million) London Olympics media center, fell 6.2 percent, the most since April 2009, to 251.4 pence as UBS AG and Liberum Capital Ltd. cut their recommendations on the stock to sell, citing concerns about margins.
Nobel Biocare Holding AG (NOBN) declined 3.3 percent to 9.28 francs. Chief Financial Officer Dirk Kirsten will resign by Jan. 31 to pursue opportunities outside the company.
Air France-KLM (AF) gained 4.4 percent to 4.06 euros after it reported a 4.6 percent increase in June passenger traffic and unions said an agreement had been reached on cutting ground- staff positions. Deutsche Lufthansa AG (LHA) advanced 0.8 percent to 9.27 euros.
Arkema SA (AKE), a French maker of industrial chemicals, surged 11 percent to 59.28 euros. The company may have received “multiple takeover approaches” valuing the business at 5.5 billion euros ($6.8 billion) or more, FT Alphaville reported.
Arkema has drawn interest from DuPont Co. and BASF SE, FT Alphaville said, citing “usually knowledgeable sources.”