Bloomberg News

European Stocks Decline as Philips Plunges; Man Group Climbs

June 22, 2011

June 22 (Bloomberg) -- European stocks fell, retreating after the Stoxx Europe 600 Index’s biggest gain in two months, as Royal Philips Electronics NV tumbled on deteriorating demand for lighting and consumer electronics.

Philips plunged the most in more than two years after the world’s biggest maker of patient-monitoring systems forecast “low single-digit” sales growth at its lighting business. Merck KGaA lost 2.8 percent after halting development of a multiple sclerosis pill. Man Group Plc climbed 4.9 percent as analysts recommended the world’s largest publicly traded hedge fund manager.

The benchmark Stoxx 600 slid 0.6 percent to 268.07 at the 4:30 p.m. close in London. The measure has tumbled 7.9 percent from this year’s peak on Feb. 17 as U.S. economic data trailed forecasts, adding to concern that Greece will fail to repay all its debt.

“Recession fears are coming back into the market and problems around sovereign debt also bring the market in a bad shape,” said Philipp Musil, who helps manage about $12 billion at Semper Constantia Privatbank AG in Vienna. “Investors are uncertain of what is coming next. We’re still quite optimistic and we’re thinking it’s a normal consolidation, but it can change quite fast if we get more confirmation of a recession.”

The U.S. Federal Open Market Committee concludes its two- day meeting today, and will release a statement after the close of European markets.

BOE Rates

Bank of England officials voted 7-2 to keep interest rates on hold this month as some of the majority saw a risk that they will need further bond purchases to stoke the economy, according to minutes of the June 8-9 meeting published today.

Greek Prime Minister George Papandreou won a vote of confidence from 155 out of 300 lawmakers over night. He still needs parliamentary approval next week for a 78 billion-euro ($112 billion) package of budget cuts to stave off default. About 3,000 people, who were protesting outside Parliament, threw water bottles, cans and fruit at police when they learned of Papandreou’s victory.

European leaders will discuss Greece’s needs at a two-day summit in Brussels starting tomorrow and finance chiefs will decide on July 3 whether Greece has met the conditions for its next aid payment.

National benchmark indexes declined in 15 of the 18 western European markets. Germany’s DAX Index lost 0.1 percent, while France’s CAC 40 slid 0.2 percent. The U.K.’s FTSE 100 fell less than 0.1 percent. Sweden’s OMX Stockholm 30 slid 1.7 percent as Electrolux AB retreated.

Philips Tumbles

Philips sank 8.8 percent to 16.41 euros, its biggest drop since March 2009. The company said it will need to deepen cost cuts to arrest deteriorating consumer demand for lighting and consumer electronics. The lighting unit will report “low single-digit” sales growth in the second quarter.

Electrolux, the world’s second-biggest appliance maker, sank 3.4 percent to 147.80 kronor, the lowest since August.

Merck KGaA lost 2.8 percent to 73 euros as the drugmaker said it will no longer seek approval for the experimental Cladribine medicine after regulators said it would have to start a new clinical trial program.

Hennes & Mauritz AB dropped 2.3 percent to 209.80 kronor, its lowest price since March. The world’s second-largest clothing retailer said the rising cost of making garments led to an 18 percent decline in second-quarter profit, missing analysts’ estimates.

Remy Cointreau Downgrade

Remy Cointreau SA slipped 1.7 percent to 56.04 euros, the first retreat in four days, as the maker of Remy Martin cognac was downgraded to “underweight” from “neutral” at JPMorgan Chase & Co.

Man Group climbed 4.9 percent to 241.8 pence, extending yesterday’s 4.1 percent increase. The hedge fund manager was raised to “outperform” from “neutral” at Credit Suisse Group AG and rated “buy” in new coverage at Goldman Sachs Group Inc.

Separately, the Daily Mail said JPMorgan Chase & Co. may be preparing a 400 pence-a-share friendly takeover offer for Man. The newspaper did not cite anyone.

Dixons Retail Plc surged 7.7 percent to 16.53 pence, ending the longest falling streak in three months. The London-based Times reported that Best Buy Co., the world’s largest consumer electronics retailer, may be interesting in bidding for its U.K. competitor.

Renault Rises

Renault SA, which owns a 43 percent stake in Nissan Motor Co., rose 2.9 percent to 39.17 euros. Nissan, Japan’s second- largest automaker, forecast that sales in the fiscal year ending March 2012 will be “significantly higher” than a year earlier, Chief Executive Officer Carlos Ghosn said in Tokyo.

Celesio AG, Europe’s biggest drug wholesaler, jumped 3.6 percent to 13.22 euros as Manager Magazin reported that Markus Pinger, board member of Beiersdorf AG, will become Celesio’s chief executive officer. The German magazine cited unidentified people close to the situation.

Suedzucker AG soared 4 percent to 23.66 euros, the highest price in at least 12 years. The maker of sugar, starch and bakery additives forecast that revenue will increase to about 6.5 billion euros and operating profit to more than 600 million euros in its financial year ending in 2012.

--With assistance from Adria Cimino in Paris. Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

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


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