Bloomberg News

European Stocks Drop From Two-Month High as Roche, Banks Decline

October 13, 2011

Oct. 13 (Bloomberg) -- European stocks fell from a two- month high as Chinese exports slowed and the European Central Bank warned imposing further losses on holders of Greek debt posed a risk to the euro area’s financial stability.

Carrefour SA retreated 5.9 percent after saying its profit may drop as much as 20 percent this year. Roche Holding AG slid 4.5 percent after posting third-quarter revenue that missed analysts’ estimates. Alcatel-Lucent surged 5.3 percent on a report France’s biggest telecommunications equipment maker will sell its corporate call-center business.

The benchmark Stoxx Europe 600 Index dropped 1.1 percent to 236.53 at the close in London. The gauge rose 1.7 percent yesterday for its biggest six-day rally since January 2009. The Stoxx 600 has still tumbled 19 percent from its high on Feb. 17 amid concern that the sovereign debt crisis in Europe will spread from Greece to the larger economies of Italy and Spain.

“It’s too early to conclude that the euro-zone problems will be solved,” said Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen. “It’s not the first time European politicians have pledged to handle the problem once and for all.”

European banks extended losses as the European Central Bank said financial institutions’ involvement in euro-area bailouts through enforced investor losses posed a risk to financial stability and would have “direct negative effects” on lenders.

Austria’s Raiffeisen Bank International AG dropped 3.2 percent to 22.50 euros and Commerzbank AG, Germany’s second- biggest lender, slipped 4.8 percent to 1.76 euros. UniCredit SpA plunged 12 percent to 92.7 euro cents, its largest slide since March 2009.

China’s Exports Slow

China’s export growth slowed to its weakest pace in seven months. Officials said that trade faces “severe challenges” as the yuan strengthens and confidence slides in developed nations.

Exports climbed a less-than-forecast 17.1 percent in September from a year earlier, customs bureau data showed in Beijing today. The trade surplus of the world’s second-largest economy fell to $14.51 billion last month from $17.76 billion in August. Imports rose 20.9 percent, also less than forecast.

In the U.S., Federal Reserve officials moved closer to setting targets for economic performance such as inflation to decide how long to keep interest rates at a record low, according to the minutes of their last meeting.

Federal Reserve Minutes

Most of the central bank’s 17 governors and regional bank presidents “saw advantages” in the approach and judged it would make policy more effective, the Fed said yesterday in the minutes of the Sept. 20-21 meeting in Washington. Some officials wanted to keep more bond purchases as an option, according to the minutes, which were released after European markets closed yesterday.

National benchmark indexes fell in 16 of the 18 western- European markets. The U.K.’s FTSE 100 Index slid 0.7 percent. France’s CAC 40 Index and Germany’s DAX Index both slipped 1.3 percent.

Carrefour sank 5.9 percent to 16.85 euros after the world’s second-largest retailer lowered its forecast for the second time in three months, saying this year’s profit may fall further than it had estimated because of a slump in Europe.

“Faced with an increasingly uncertain environment, we are, as a matter of prudence, broadening the range of our 2011 current operating income guidance to a decline of 15 percent to 20 percent,” Chief Executive Officer Lars Olofsson said in a statement. The Boulogne-Billancourt, France-based company forecast in August a 15 percent drop in profit from restated 2010 figures.

Mining Companies Decline

A gauge of mining shares posted the second-worst performance of the 19 industry groups on the Stoxx 600. Kazakhmys Plc led commodity companies lower, falling 5.7 percent to 878.5 pence. Antofagasta Plc, the copper producer controlled by the Luksic family, Chile’s richest, dropped 6.3 percent to 1,078 pence.

Roche sank 4.5 percent to 140.90 Swiss francs after Europe’s second-largest drugmaker reported revenue that fell 15 percent as the franc gained and revenue declined for the company’s three top medicines.

Group sales declined to 9.82 billion francs ($11 billion) from 11.5 billion francs a year earlier, the Basel, Switzerland- based company said in an e-mailed statement today. That missed the 10.2 billion-franc average estimate of 15 analysts surveyed by Bloomberg.

Alcatel-Lucent Rallies

Alcatel-Lucent increased 5.3 percent to 2.18 euros after the Financial Times reported that the company agreed to sell the call-center business for as much as $1.5 billion to private- equity firm Permira Advisers LLP. The newspaper did not say where it got the information. Both companies declined to comment.

Rolls-Royce Group Plc jumped 9.9 percent to 688 pence for the largest gain on the Stoxx 600 after the jet-engine maker agreed to sell its share in a venture making engines for the Airbus A320 aircraft. Rolls-Royce sold its 32.5 percent stake in International Aero Engines to Pratt & Whitney for $1.5 billion and payments for 15 years.

Mitchells & Butlers Plc tumbled 6.9 percent to 235.1 pence as Piedmont Inc. said it won’t proceed with its offer for the owner of the All Bar One pub chain.

--With assistance from Sarah Jones. 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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