European Stocks Drop, Led by BHP Billiton, Lagardere; VW Gains
March 11, 2010, 12:08 PM ESTBy Daniela Silberstein
March 11 (Bloomberg) -- European stocks declined from a seven-week high as U.S. jobless claims fell less than forecast and basic-resource producers retreated on speculation rising inflation will prompt China to pare back stimulus measures.
BHP Billiton Ltd., the world’s largest mining company, slid 2.1 percent as Chinese inflation reached a 16-month high. Lagardere SCA slumped the most in 12 months after France’s biggest publisher reported earnings that missed estimates. Auto shares limited the retreat as Volkswagen AG, Europe’s largest automaker, rallied the most since August.
The Stoxx Europe 600 Index slipped 0.3 percent to 257.6, the third decline this week. The benchmark gauge for the region’s equities has climbed 8.5 percent since Feb. 5 on speculation the European Union will support Greece if needed as it struggles to reduce the region’s biggest budget deficit.
“Data on the labor market are in focus at the moment and the market reacts skeptically to anything that is not significantly above expectations,” said Gerold Kuehne, who manages $172 million at LLB Asset Management AG in Vaduz, Liechtenstein. “The continuing claims were higher than the market had hoped for. That was disappointing.”
Greek Strikes
Greek hospitals, airports and schools were shut today and police scuffled with protesters as unions staged the second general strike this year against government budget cuts. Mohamed A. El-Erian, whose company runs the world’s biggest mutual fund, said worsening government finances may affect the global economy more than is currently realized.
“The importance of the shock to public finances in advanced economies is not yet sufficiently appreciated and understood,” El-Erian, co-chief investment officer at Pacific Investment Management Co., wrote in an article on the Financial Times Web site. The potential damage from increased government borrowings is “at present being viewed primarily -- and excessively -- through the narrow prism of Greece.”
National benchmark indexes dropped in 15 of the 18 western European markets. The U.K.’s FTSE 100 and France’s CAC 40 fell 0.4 percent. Germany’s DAX declined 0.1 percent.
Mining Companies Drop
BHP Billiton fell 2.1 percent to 2,193 pence. Xstrata Plc, the world’s fourth-largest copper producer, retreated 1.6 percent to 1,191.5 pence.
Kazakhmys Plc slipped 3.2 percent to 1,496 pence. Goldman Sachs Group Inc. removed Kazakhstan’s biggest copper miner from its “conviction buy” list and reduced its recommendation to “neutral.”
Lagardere sank 7.3 percent to 26.39 euros, the biggest drop since last March. Full-year adjusted net income, excluding the company’s stake in European Aeronautic, Defence & Space Co., fell 9.5 percent to 324 million euros ($442 million). Analysts had predicted profit of 374 million euros, according to the average of 10 estimates compiled by Bloomberg.
Volkswagen rallied 7.7 percent to 68.68 euros, leading a gauge of auto shares to the biggest gain among 19 industry groups in the Stoxx 600. The carmaker said two-month sales at its seven car brands and its van division surged 27 percent, outpacing a 20 percent increase in the global market in the period. VW also said it will seek shareholders’ approval in April to raise as much as 5 billion euros in the sale of convertible bonds.
BMW, Porsche
Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, climbed 1.3 percent to 32.69 euros after reporting a smaller-than-expected decline in full-year profit and maintaining its dividend.
Porsche SE, the maker of the 911 sports car, surged 4.9 percent to 42.34 euros, the biggest gain in two months.
Pirelli & C. SpA, Europe’s third-largest tiremaker, increased 1.5 percent to 43.4 euro cents. Mediobanca SpA upgraded the shares to “outperform” from “neutral,” citing a “deeply improved outlook.”
Geberit AG declined 4 percent to 187.1 Swiss francs. Europe’s biggest maker of toilet-flushing systems expects construction to fall further in Europe and North America, Chief Executive Officer Albert Baehny said, adding the company has seen no meaningful impact from government stimulus packages.
Q-Cells SE, a German solar-cell maker, dropped 4.5 percent to 7.26 euros after Chief Executive Officer Anton Milner stepped down with immediate effect. Chief Financial Officer Nedim Cen will replace Milner as CEO, the company said.
GEA Group AG, whose machines milk a third of the world’s dairy cows, posted the biggest gain in the Stoxx 600. The company surged 7.9 percent to 16.40 euros, the most since July, after saying full-year net income rose 60 percent to 161.7 million euros and predicting higher order intake for this year and a “stabilization” of sales.
--Editors: Andrew Rummer, David Merritt.
To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.
