Bloomberg News

European Stocks Fall From 11-Week High; STMicroelectronics Drops

October 25, 2011

Oct. 25 (Bloomberg) -- European stocks slid from an 11-week high as U.S. consumer confidence fell and a canceled finance ministers’ meeting fueled concern that the region’s leaders may struggle to resolve the debt crisis at a summit tomorrow.

STMicroelectronics NV sank 7.4 percent as Europe’s largest semiconductor maker forecast sales that trailed estimates. Meyer Burger Technology AG lost 13 percent as the maker of solar-panel equipment said it will halt output at a Swiss unit amid “high uncertainties” within the industry. BP Plc and BG Group Plc led energy companies higher after reporting earnings.

The Stoxx Europe 600 Index declined 0.7 percent to 240.29 at the close of trading, having earlier climbed 0.4 percent. German Chancellor Angela Merkel and fellow leaders return to Brussels tomorrow for a second summit in four days to discuss Europe’s bailout fund. Policy makers are jousting with banks over the size of losses they take on Greek bonds while deliberating over leveraging the fund after ruling out tapping the European Central Bank’s balance sheet.

“The market very much discounts that there will be some kind of result out of the meeting tomorrow,” said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which oversees $74 billion. “Any delays or noise that suggests otherwise is a clear negative.”

Canceled Meeting

Stocks extended losses after the U.K. government said a meeting of EU finance ministers scheduled for tomorrow to decide on bank recapitalization was canceled. They pared some of their decline as it was confirmed that summits of the 27 EU leaders and 17 euro-area heads of government will take place in Brussels as planned.

The gathering of finance ministers was canceled because the bank-recapitalization issue cannot be decided before other elements of the rescue package, a person familiar with the matter said on condition of anonymity.

The Stoxx 600 has rallied for four straight weeks, its longest stretch of gains since December, amid speculation euro- region policy makers will find a solution to the crisis that has Greece on the edge of a default. The measure has still plunged 18 percent from this year’s highest level on Feb. 17.

“We have a very difficult task for the politicians,” John Ricciardi, the head of investment at Kestrel Partners LLP in London, said in a Bloomberg Television interview with Linzie Janis. “All of us in the investing world are concerned by the continued high leverage in the European banking system.”

U.S. Consumer Confidence

In the U.S., consumer confidence unexpectedly slumped in October to the lowest level since March 2009. The Conference Board’s sentiment index decreased to 39.8 from a revised 46.4 reading in September, figures from the New York-based private research group showed today. This month’s reading was less than the most pessimistic forecast in a Bloomberg News survey in which the median projection was 46.

National benchmark indexes fell in 15 of the 18 western European markets today. The U.K.’s FTSE 100 declined 0.4 percent and France’s CAC 40 retreated 1.4 percent. Germany’s DAX Index slipped 0.1 percent.

STMicroelectronics tumbled 7.4 percent to 5.06 euros in Milan after saying net revenue will range from $2.15 billion to $2.3 billion. That compared with an average analyst estimate of $2.52 billion, according to Bloomberg data. Forecasts for gross margin, the percentage of sales remaining after costs of production, were also below projections.

Meyer Burger lost 13 percent to 20.55 Swiss francs as Europe’s biggest solar-panel equipment maker said it will temporarily halt output at its MB Wafertec unit in Switzerland amid “high uncertainties” in the solar industry.

Reckitt, Novartis

Reckitt Benckiser Group Plc retreated 3.4 percent to 3,330 pence, the biggest drop in a month. The maker of Lysol cleaners forecast lower sales and profit at its pharmaceutical division in the fourth quarter because of U.S. health-care reforms and a price increase for Suboxone tablets.

Novartis AG, Europe’s second-biggest pharmaceutical company, lost 3.3 percent to 50.10 francs after saying it plans to eliminate 2,000 jobs in Switzerland and the U.S. and add employees in China and India to offset the effect of drug-price reductions.

BP, the operator of the Macondo well in the Gulf of Mexico that caused the worst accidental U.S. oil spill last year, climbed 4.4 percent to 457.2 pence as profit beat analysts’ estimates. Earnings adjusted for one-time items and changes in inventory were $5.3 billion, down from $5.5 billion a year earlier. The average estimate of 12 analysts surveyed by Bloomberg was for income of $5 billion on that basis.

‘No Nasty Surprises’

“BP is now out of the danger zone,” said Timothy Guinness, chief executive officer of Guinness Atkinson Asset Management in London, which has $850 million in client assets and owns BP shares. “There are no nasty surprises. It’s cheap. I was buying yesterday and I’ll be buying today.” He spoke in a Bloomberg Television interview.

BG Group rose 3.8 percent to 1,378 pence. The U.K.’s third- largest natural-gas producer said third-quarter earnings rose 25 percent as energy-price gains countered output constraints.

Neste Oil Oyj surged 13 percent to 9.06 euros, the biggest gain since 2008. Finland’s only oil refiner was boosted by the improving outlook for its renewable fuels unit.

Swedbank AB, the largest lender in the Baltic states, rose 3.7 percent to 90.05 kronor as it reported a 34 percent jump in third-quarter profit and said costs will decline in 2012 as it adjusts to the European economic slowdown.

Svenska Cellulosa AB rallied 6.4 percent to 93.80 kronor. Europe’s largest tissue maker said it will reduce its staff by 2,000 employees with the aim of saving about 700 million kronor ($107 million).

--With assistance from Adria Cimino in Paris. Editor: Andrew Rummer

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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


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