European Stocks Decline on Bank-Capital Concern; UniCredit Sinks
January 05, 2012, 7:29 PM ESTBy Peter Levring
Jan. 5 (Bloomberg) -- European stocks declined for a second day as concern that the region’s banks will have to raise capital overshadowed a report showing that U.S. companies added more workers to their payrolls than economists had predicted.
UniCredit SpA, which announced a rights offer at a 43 percent discount yesterday, slumped to a 19-year low. Societe Generale SA dropped 5.4 percent after announcing it will cut corporate- and investment-banking staff.
The Stoxx Europe 600 Index fell 0.9 percent to 247.39 at the close in London. The gauge lost 11 percent last year as policy makers struggled to contain the euro area’s debt crisis.
“UniCredit’s capital call spooked investors and reduced confidence in banking short term,” said Torben Hoeyer, the chief equity adviser at Nordea Private Banking in Copenhagen. “Now rumors are going round that other banks may also sell shares and that’s pushing stocks lower.”
Italy’s largest lender declined 17 percent to 4.48 euros, its lowest price since September 1992. The bank announced a plan to sell new shares at a discount because the debt crisis is worsening, Chief Executive officer Federico Ghizzoni told Il Sole 24 Ore in an interview. He added that he expects other banks raising money to do the same.
National benchmark indexes fell in every west-European market, except Denmark and Norway. France’s CAC 40 Index dropped 1.5 percent, the U.K.’s FTSE 100 Index slipped 0.8 percent and Germany’s DAX Index lost 0.3 percent.
U.S. Payrolls
In the U.S., private employers added 325,000 workers to payrolls in December, according to a report from Roseland, New Jersey-based ADP Employer Services. That was the biggest increase in records going back to 2001. The median projection in the survey called for an advance of 178,000.
A report from the Labor Department showed that the number of applications for jobless benefits fell by 15,000 last week to 372,000. Economists had forecast a drop to 375,000.
France sold 7.96 billion euros ($10.2 billion) of debt today as borrowing costs rose. The government sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent from 3.18 percent in an auction on Dec. 1. The nation also sold debt maturing in 2023, 2035 and 2041.
Germany yesterday sold 4.1 billion euros of bonds kicking off a rush for funding that may determine whether euro-area leaders can save the 13-year-old single currency. Italy and Spain will raise funds in the coming weeks. Sovereign-debt sales in the region may reach 262 billion euros in the first quarter, according to Deutsche Bank AG forecasts.
Greece’s Papademos
In Greece, Prime Minister Lucas Papademos said that deeper cuts in incomes are the only way for the country to remain in the euro area and receive more financing from international creditors. These steps are necessary to avert an economic collapse that may otherwise come as soon as March, he said.
In Germany, retail sales, adjusted for inflation and seasonal swings, decreased 0.9 percent in November, the Federal Statistics Office in Wiesbaden said. Economists had forecast a gain of 0.2 percent in a Bloomberg News survey.
A gauge of European banks was the worst performer among the 19 industry groups on the Stoxx 600, losing 3.2 percent.
Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s biggest lenders, declined 4.5 percent to 5.53 euros and 5 percent to 6.30 euros, respectively, after the Financial Times cited Economy Minister Luis de Guindos as saying banks will have to allocate as much as 50 billion euros in further provisions for “troubled” real-estate assets.
Deutsche Bank AG, Germany’s largest lender, tumbled 5.6 percent to 27.97 euros for its biggest drop since November.
Societe Generale Job Cuts
Societe Generale, France’s second-largest lender, retreated 5.4 percent to 16.08 euros after saying it will cut about 1,580 jobs at its corporate and investment bank, about 10 percent of the unit’s total staff.
Nokia Oyj rose 7.1 percent to 4.16 euros after Credit Suisse Group AG raised its recommendation to “outperform” from “underperform.” The company considers Risto Siilasmaa, the founder of security software maker F-Secure Oyj, as the frontrunner to become its next chairman, a person familiar with the matter said.
Petrofac Ltd., the U.K. oilfield-services provider, advanced 1.9 percent to 1,493 pence after agreeing with Schlumberger Ltd. to cooperate on production projects.
Brenntag AG fell 1.2 percent to 71.40 euros, its biggest drop in four weeks. Brachem Acquisition SCA sold an 8.7 percent stake in the chemical distributor to institutional investors for about 315 million euros.
CRH Plc and HeidelbergCement AG fell 2.7 percent to 15.06 euros and 2.8 percent to 33.61 euros, respectively. Credit Suisse lowered its recommendation on both companies to “underperform” and said volumes, prices and margins in the building-materials business will remain “challenged.”
Eurasian Natural Resources Corp. rose 4.6 percent to 695 pence after agreeing to pay $1.25 billion to acquire First Quantum Minerals Ltd.’s assets in the Democratic Republic of the Congo, ending a legal dispute between the parties, the companies said in statements today.
--Editors: Srinivasan Sivabalan, Will Hadfield
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
