Bloomberg News

European Stocks Retreat as U.S. Jobs Report Misses Estimates

July 08, 2011

July 8 (Bloomberg) -- European stocks dropped, pushing the benchmark Stoxx Europe 600 Index to a weekly loss, as a report showed the U.S. economy added fewer workers in June than predicted, indicating that the economic recovery is faltering.

British Sky Broadcasting Plc fell 7.6 percent after the U.K. said it will take “some time” to consider responses to News Corp.’s proposed takeover. UniCredit SpA, tumbled 7.9 percent, as bank shares retreated across Europe with a gauge of lenders on the Stoxx 600 slumping 2.3 percent. Banco Santander SA dropped 3.8 percent.

The Stoxx 600 declined 0.8 percent to 273.76 at the 4:30 p.m. close in London. The gauge retreated 0.4 percent this week. The benchmark measure has slumped 6 percent from this year’s high on Feb. 17 on concern that the euro area’s sovereign-debt crisis will derail its economic recovery.

“Non-farm payrolls disappointing will create uncertainty about future indicators,” said Anders Nellemose, chief strategist at Danske Bank A/S in Copenhagen, before the U.S. Labor Department published its jobs report. “Even less-bad macro news will destabilize sentiment going forward.”

European stocks plunged as the Labor Department reported that employers added fewer workers in June than economists had predicted. Payrolls rose by 18,000 workers last month, missing the average estimate for an increase of 105,000. The Labor Department also revised down the number of workers hired in May to 25,000 from 54,000. The unemployment rate climbed to 9.2 percent, exceeding economists’ forecast that it would remain at 9.1 percent for a second month.

National benchmark indexes dropped in all but one Western European country today. The U.K.’s FTSE 100 Index slid 1.1 percent, France’s CAC 40 Index lost 1.7 percent and Germany’s DAX Index slipped 0.9 percent. Italy’s FTSE MIB Index decreased 3.5 percent to its lowest level in a year.

Adecco, Mining Companies

Adecco SA, the world’s largest supplier of temporary workers, dropped 3.7 percent to 53.60 Swiss francs. The company generated 19 percent of its revenue from North America in 2010.

Mining companies retreated as base metals declined on the London Metal Exchange. Vedanta Resources Plc slumped 4.3 percent to 1,973 pence and Antofagasta Plc decreased 4.5 percent to 1,424 pence. BHP Billiton Plc, the world’s biggest miner, dropped 2.7 percent to 2,454 pence.

BSkyB tumbled 7.6 percent to 750 pence, its biggest drop since October 2008, after News Corp. decided to close its News of the World tabloid newspaper after a phone-tapping scandal. News Corp. needs the U.K. government’s approval before it can buy the BSkyB shares that it doesn’t already own.

Trinity Mirror Plc, the publisher of the U.K’s Daily Mirror newspaper, surged 4.2 percent to 50 pence.

Bank Stress Tests

UniCredit sank 7.9 percent to 1.23 euros as Italy’s bonds slid for a fifth straight day, pushing yields to a nine-year high. Banca Popolare di Milano Scarl dropped 6.1 percent to 1.53 euros and Intesa Sanpaolo SpA retreated 4.6 percent to 1.65 euros.

European regulators moved to staunch the euro area’s banking crisis by requiring companies to publish greater details of their assets and future profitability, giving them six months to make up any capital shortfalls.

Lenders will be required to disclose their capital levels, estimates for profitability in 2011 and 2012 and their holdings of sovereign debt, the London-based European Banking Authority said in a statement today. Banks will also have to disclose how much additional capital they will need to raise.

“The crisis is not finished,” said Jacques Porta, a Paris-based fund manager at Ofi Patrimoine, who helps oversee about $425 million in stocks. “The next target seems to be Italy, and that’s a big target. This is contagion.”

Santander, BBVA Fall

In Spain, Santander retreated 3.8 percent to 7.56 euros and Banco Bilbao Vizcaya Argentaria SA dropped 4 percent to 7.52 euros.

RWE AG, Germany’s second-biggest utility, fell 4 percent to 37.02 euros after the Financial Times Deutschland reported that the company’s supervisory board may debate a share sale at an extraordinary meeting at the beginning of August. The newspaper cited Chief Executive Officer Juergen Grossmann.

Grifols SA rose 1.8 percent to 14.40 euros after Exane BNP Paribas named the Spanish plasma maker its top pick among medical-technology companies.

--With assistance from Corinne Gretler in Zurich. 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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