Stocks in Europe Decline After Worse-Than-Expected PMI Data; TUI Retreats
Thursday, 23 February 2012 | 00:00
European stocks retreated for a second day after a report showed services and manufacturing output in the euro area unexpectedly contracted in February.
Straumann Holding AG (STMN), the world’s biggest maker of dental implants, fell the most since November after full-year profit missed analysts’ estimates. TUI AG (TUI1), Europe’s largest travel company, declined 7.6 percent after Banco CAM SAU sold a 12.9- million block of shares. PSA Peugeot Citroen, Europe’s second- largest carmaker, surged 12 percent.
The Stoxx Europe 600 Index (SXXP) fell 0.8 percent to 264.59 at the close. The gauge has still rallied 8.2 percent this year amid speculation that the euro area’s sovereign-debt crisis will be contained and as U.S. economic data exceeded forecasts.
“Given that Europe is still shrouded by the cloud of recession, a weak PMI -- though not rain on the parade -- will surely damp investor sentiment,” said Manish Singh, the London- based head of investment at Crossbridge Capital, which has more than $2 billion under management. “In particular, weak numbers from Germany indicate weak European demand and a weak growth prospect for the euro zone as a whole.”
European (SXXP) services and manufacturing output unexpectedly shrank in February as the euro-area economy struggled to rebound from a contraction in the fourth quarter. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 49.7 from 50.4 in January, London-based Markit Economics said in an initial estimate released by e-mail today. Economists had forecast a reading of 50.5, according to the median of 16 estimates in a Bloomberg News survey.
A separate Purchasing Managers Index showed German services and manufacturing expansion unexpectedly slowed in February amid declining orders at factories in Europe’s largest economy.
The second rescue package for Greece may not be enough to end the debt crisis, Bank of England Deputy Governor Charlie Bean said in a speech late yesterday in Glasgow, Scotland.
While the agreement “is certainly welcome, there still remains a possibility that events could unfold in a disorderly and damaging fashion at some stage in the future,” Bean said.
Fitch Ratings cut Greece’s credit grade two levels to ‘C’ from ‘CCC’ after the country got approval to proceed with a bond exchange that will reduce its debt burden and avert the collapse of the economy.
Euro-area finance ministers yesterday approved a 130 billion-euro ($172 billion) package for Greece by tapping into European Central Bank profits and convincing investors to provide more debt relief to the country. The deal includes a 53.5 percent writedown for investors in the nation’s debt.
Minutes of the U.K central bank’s February meeting showed seven of the nine members of the BOE’s Monetary Policy Committee, including Governor Mervyn King, voted to increase the bond-purchase target by 50 billion pounds ($78.6 billion) to 325 billion pounds. They argued that a larger increase “risked sending a signal that the committee thought the economic situation was weaker than it was,” the minutes showed.
Straumann dropped 8.4 percent to 145.70 Swiss francs, its biggest decline since Dec. 30, after it reported full-year earnings before interest and taxes of 79.9 million francs ($87.6 million). That missed the average analyst estimate of 164.3 million francs. Net income was 71 million francs, compared with the 75.6 million-franc projection by analysts.
TUI (TUI1) retreated 7.6 percent to 5.99 euros. BNP Paribas (BNP) SA is managing the sale of 12.85 million TUI shares priced at 6.05 euros apiece, according to terms of the offer obtained by Bloomberg News.
Nexity SA (NXI), the French real-estate services company, dropped 6.6 percent to 21.86 euros as it forecast a “trough year” in 2012 for the new homes market and a slowdown in commercial real estate. The company’s full-year net income slumped to 54.2 million euros from 119.8 million euros in 2010.
Temenos Group AG lost 5.7 percent to 16.50 francs after the banking-software maker’s fourth-quarter revenue of $127 million missed the average analyst estimate of $139.1 million. The company was unable to give 2012 forecasts due to its proposed merger with Misys Plc.
Peugeot surged 12 percent to 16.13 euros, the most since April 2009. The company, which last week reported a slump in profit and an increase in debt, is in talks on a possible alliance with General Motors Co., French Labor Minister Xavier Bertrand said.
Cove Energy Plc (COV) rallied 26 percent to 194 pence, the highest since at least May 2005, according to data compiled by Bloomberg. Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, offered to buy the U.K. explorer for 992.4 million pounds in cash.
Klepierre SA (LI), France’s second-largest publicly traded shopping center owner, rose 1 percent to 23.78 euros after La Lettre de L’Expansion reported that BNP Paribas SA is in talks to sell its 51 percent stake in the company to Norway’s Norges Bank.
Accor SA (AC), Europe’s biggest hotel company, advanced 2.5 percent to 26.84 euros after full-year profit rose 19 percent. Earnings before interest and tax climbed to 530 million euros from 446 million euros a year earlier. That compared with the 523.7 million-euro average of 17 analyst estimates in a Bloomberg survey and Accor’s own forecast of 510 million euros to 530 million euros.