Bloomberg News

European Stocks Fall for Sixth Week as Greek Lenders Tumble

June 10, 2011

June 11 (Bloomberg) -- European stocks fell for a sixth week as Federal Reserve Chairman Ben S. Bernanke gave no hint that he will unveil a new round of stimulus to support an economic recovery that investors speculate is faltering.

Four Greek banks, including the country’s biggest lender National Bank of Greece SA, sank more than 7 percent, dragging the Stoxx 600 Banks Index lower. Home Retail Group Plc plunged 22 percent after the company said that sales slumped at its Argos chain as the market for consumer electronics weakened.

The benchmark Stoxx Europe 600 Index declined 2 percent to 268.13 this past week, for the longest losing streak since 2008, as investors speculated that the slowdown in the global recovery will continue. The gauge has slumped 7.9 percent from this year’s high on Feb. 17.

“Structurally it’s still a very challenging environment,” said William De Vijlder, the Brussels-based chief investment officer of BNP Paribas Investment Partners, which manages $780 billion, in a briefing with reporters in London. “There is this paranoia about the risk of a double-dip recession.” De Vijlder has a “neutral” stance on developed-market equities.

National benchmarks retreated in all 18 west European countries this past week. The U.K.’s FTSE 100 Index decreased 1.5 percent, Germany’s DAX Index dropped 0.6 percent and France’s CAC 40 Index fell 2.2 percent, the biggest loss in 12 weeks. Greece’s ASE Index sank 6.1 percent.

Federal Reserve Stimulus

In the U.S., Bernanke said that the “uneven” and “frustratingly slow” economic recovery warrants continued monetary stimulus. Even so, he gave no indication that he plans a third round of asset purchases known as quantitative easing, nicknamed “QE3” by investors.

Separately, the Fed said the economy is slowing in 4 of the 12 regions of the U.S. as consumers contended with higher food and fuel prices and shortages of parts reduced car production.

European stocks consolidated their losses as German Finance Minister Wolfgang Schaeuble intensified his calls for bondholders to assume a “fair” share of further Greek aid, setting Europe’s biggest economy on a collision course with the European Central Bank.

In a speech to parliament in Berlin, Schaeuble appealed to lawmakers to back a second bailout for Greece to ensure a stable euro and bolster the global economy. In return, “we have to insist on the participation of the private sector,” he said.

Greek Banks Slide

Greek banks were some of the biggest losers this past week. They included National Bank of Greece, which dropped 9.5 percent, and EFG Eurobank Ergasias SA, which slumped 12 percent.

Hellenic Telecommunications Organization SA sank 15 percent as the Greek government said it will sell a 10 percent stake in the company, which is also known as OTE, to Deutsche Telekom AG for 400 million euros ($575 million).

Home Retail tumbled 22 percent after the U.K. retailer said a plunge in first-quarter sales of televisions and video games led the company to cut the annual revenue forecast for its U.K. Argos chain.

French carmakers Peugeot SA and Renault SA fell 2.6 percent and 4.6 percent, respectively. Peugeot said it will review its production sites in France to improve competitiveness as its market share in Europe drops. Denis Martin, executive vice president for human resources, said that Europe’s second-largest carmaker can’t rule out plant closures.

Nokia Oyj retreated 4.1 percent, extending the previous week’s drop, as Standard & Poor’s cut its credit rating for the second time this year. The company confirmed it remains in talks with “multiple partners” to sell its stake in the Nokia Siemens Networks business.

ThyssenKrupp AG, Germany’s largest steelmaker, surged 7.7 percent to its highest price since August 2008 after Citigroup Inc. reiterated that the stock is one of its “top picks in steel.”

--With assistance from Adam Haigh and Will Hadfield in London. Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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