European Stocks Retreat From 17-Month High; Greek Banks Slump
March 18, 2010, 1:30 PM EDTBy Adam Haigh
March 18 (Bloomberg) -- European stocks retreated from a 17-month high as concern that a bailout plan for Greece is unraveling overshadowed a rally by health-care companies.
Greece’s ASE Index slid the most in almost six weeks as Greek Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial-aid mechanism for the nation. HSBC Holdings Plc led financial shares lower as Citigroup Inc. cut its stance on the industry. GlaxoSmithKline Plc jumped the most in nine months after Novartis AG gave up U.S. rights to a potential rival to its best-selling drug.
The Stoxx Europe 600 Index slipped 0.1 percent to 261.2, having swung between gains and losses at least 12 times. The gauge has surged 65 percent since March 9 last year as governments and central banks around the world maintained low interest rates and committed more than $12 trillion to stimulate the economy. The measure retreated for the first two months of 2010 amid concern that Greece will struggle to rein in Europe’s biggest budget deficit.
“Our long-held fears that there will be very major sovereign problems as far as the eye can see have started to materialise,” Jim Reid, a London-based strategist at Deutsche Bank AG, wrote in a report. “In the near term we would like to keep fairly neutral on European equities.”
National benchmark indexes declined in 15 of the 18 western European markets today. France’s CAC 40 fell 0.5 percent, Germany’s DAX slipped 0.2 percent and the U.K.’s FTSE 100 was little changed.
Greek Stocks Slide
Greece’s ASE Index sank 3.4 percent as Papandreou said he may turn to the International Monetary Fund to overcome the country’s debt crisis unless leaders agree to set up a lending facility at a summit on March 25-26.
National Bank of Greece SA, the nation’s biggest lender, dropped 6 percent to 14.70 euros. EFG Eurobank Ergasias SA, the second-largest bank, slumped 7.1 percent to 6.05 euros. Alpha Bank SA, the third-biggest, plunged 9.6 percent to 6.40 euros, the most since June.
Bank stocks posted the steepest decline among all 19 industry groups in the Stoxx 600 after Citigroup cut its stance on global financial shares to “neutral” from “overweight.”
“Those investors who took a brave top-down view and moved overweight financials as they called the 2009 market surge should now be reducing exposure and moving back towards a more stock-picking approach within the sector,” according to a report by Citigroup equity strategist Robert Buckland. Profits at European financial companies are forecast to grow 65 percent in 2010 after a 351 percent jump last year, according to analyst estimates compiled by Bloomberg.
HSBC, UBS
HSBC, Europe’s biggest bank, lost 1.7 percent to 681 pence and UBS AG fell 1.9 percent to 16.45 Swiss francs.
Glaxo, the U.K.’s biggest drugmaker, rallied 3.9 percent to 1,272 pence, leading a gauge of health-care shares to the second-largest advance in the Stoxx 600. Novartis returned U.S. development rights to a generic version of an asthma drug to U.K. partner Vectura Group Plc, potentially easing the threat to Glaxo’s Advair.
“Although the risk of Advair generics is not fully mitigated, this can now be assumed greatly reduced,” Panmure Gordon & Co. analyst Savvas Neophytou wrote. “Not only is Vectura a smaller company with limited development expertise of U.S. generics, but its balance sheet is also limited which may define the amount of risk it is willing to take” in introducing a generic version.
SGL Slumps
SGL Carbon SE, the world’s largest maker of carbon and graphite products, slid 8.2 percent to 21.21 euros after reporting a 2009 loss of 60.3 million euros ($82.5 million), compared with a year-earlier profit of 190.5 million euros.
SIG Plc sank 8.9 percent to 116.1 pence, the most in nine months, after forecasting first-half pretax profit will be “well below” year-earlier levels. Europe’s biggest supplier of insulation and roofing reported a full-year loss of 45.6 million pounds ($69.5 million) and said it will skip its final dividend.
Enel SpA slipped 1.9 percent to 4.12 euros after Italy’s largest utility proposed cutting its dividend by 49 percent to 25 cents and said earnings before interest, tax, depreciation and amortization will be little changed this year and next.
Arriva Plc advanced 4.6 percent to 708 pence, extending yesterday’s 17 percent jump, after Deutsche Bahn AG, Germany’s state rail company, confirmed its interest in the U.K. train and bus operator.
Adidas Advances
Adidas AG, the world’s second-biggest sporting-goods maker, climbed 3.3 percent to 38.66 euros after rival Nike Inc. said third-quarter profit more than doubled, beating estimates.
Danisco A/S climbed 3.7 percent to 412.9 kroner, the highest level since 2007, after reporting a narrower-than- expected loss. The second-largest maker of food enzymes reported a third-quarter net loss of 354 million kroner ($65 million), compared with the 503 million-krone median estimate of six analysts surveyed by Bloomberg.
Etablissements Maurel & Prom SA gained 4.7 percent to 11.86 euros, the biggest jump since June. The French oil explorer gave an update for its Mafia Deep operation in Nigeria and confirmed the drilling could lead to a commercial well.
--With assistance from Alexis Xydias in London. Editors: Andrew Rummer, David Merritt.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.
