Bloomberg News

European Stocks Close Little Changed After U.S. Payrolls Report

January 06, 2012

Jan. 6 (Bloomberg) -- European stocks closed little changed, with the Stoxx Europe 600 Index completing its third straight weekly gain, as a report showed U.S. employers added more jobs than economists had predicted.

Daimler AG and Bayerische Motoren Werke AG led automakers lower. UniCredit SpA sank 11 percent, bringing its three-day plunge to 37 percent. Mitchells & Butlers Plc, the Birmingham, England-based pub owner, jumped 8.7 percent after Morgan Stanley recommended the stock.

The benchmark Stoxx 600 rose less than 0.1 percent to 247.53 at the close of trading, having earlier climbed as much as 0.9 percent and fallen 0.3 percent. The gauge advanced 1.2 percent this week and has rallied 15 percent from last year’s lowest level on Sept. 22 as U.S. economic reports showed the recovery is gathering pace and optimism grew that euro-area policy makers will contain the region’s sovereign-debt crisis.

“The U.S. can’t exonerate the rest of the world,” said Emmanuel Soupre, who helps oversee $5.7 billion at Neuflize Private Assets in Paris. “The problems in Europe are chronic. Foreseeing an improvement in the U.S. doesn’t mean the improvements will extend beyond America. It’s best to remain cautious.”

National benchmark indexes declined in 12 of the 14 western European markets open today. Germany’s DAX Index slipped 0.6 percent and France’s CAC 40 retreated 0.2 percent. The U.K.’s FTSE 100 Index rose 0.5 percent. Markets were closed in Greece, Finland, Sweden and Austria for a holiday.

U.S. Jobs Data

U.S. employers added 200,000 jobs last month, following a revised 100,000 gain in November that was smaller than initially estimated, Labor Department figures showed. The median projection in a Bloomberg survey called for a December gain of 155,000. The unemployment rate unexpectedly fell to 8.5 percent, the lowest since February 2009, while hours worked and earnings climbed.

It’s “very hard to believe these numbers are sustainable going forward or suggest meaningful employment,” said Ioan Smith, a director at Knight Capital Europe Ltd. in London. “People are dropping off the claiming system, not looking for work.”

Euro-area consumer confidence fell to the lowest in more than two years and unemployment remained at a 13-year high, according to data released today.

An index of executive and consumer sentiment in the 17- nation euro area fell to 93.3 in December from a revised 93.8 in November, the European Commission in Brussels said. That was in line with the median of 19 economists’ estimates in a Bloomberg survey. The unemployment rate held at 10.3 percent in November, a separate report showed.

German Support

European Central Bank Governing Council member Klaas Knot said Germany should support increasing the euro area’s bailout fund to help end the debt crisis.

“The most important obstacle lies in Germany, not in the Netherlands,” Knot said in an interview on Dutch public television last night. “I think that more money is needed and we will use the time to convince our German colleagues.”

Federal Reserve Bank of New York President William Dudley called on the U.S. government to try new programs to revive the housing market while saying the central bank may still consider ways to cut interest rates.

“Implementing such policies would improve the economic outlook and make monetary accommodation more effective,” Dudley said today in a speech to bankers in Iselin, New Jersey. At the same time, it’s “appropriate” for the Fed to consider steps to ease monetary policy, he said.

BMW, Daimler Fall

BMW and Daimler each slid 1.1 percent, to 55.55 euros and 36.47 euros respectively. Automakers fell 0.7 percent, among the largest drop of 19 industry groups in the Stoxx 600.

UniCredit tumbled 11 percent to 3.98 euros, the lowest level since 1992, after Italy’s biggest bank priced a 7.5 billion-euro ($9.6 billion) rights offer at a discount on Jan. 4. The Italian market regulator, Consob, said yesterday that it’s investigating the share move to verify whether its ban on short selling in financial stocks has been respected.

Man Group Plc fell 8.4 percent to 112.7 pence, the lowest in 11 years, after analysts cut their earnings estimates on the world’s biggest publicly traded hedge-fund manager.

RBC Capital Markets analyst Peter Lenardos lowered Man to “sector perform” from “outperform” after concluding that fourth-quarter outflows from the company’s hedge funds and investment losses were worse than he initially assumed, according to a note sent to clients today. JPMorgan Chase & Co. analysts cut their earnings-per-share estimate for Man Group to 5.7 pence next year from a previous estimate of 25.7 pence.

M&B, Vodafone Upgrades

Mitchells & Butlers advanced 8.7 percent to 249.8 pence. The operator of Harvester and Toby Carvery chains was upgraded to “overweight” from “equal weight” at Morgan Stanley.

Vodafone Group Plc, the world’s largest mobile-phone operator, climbed 1.2 percent to 179.5 pence after Goldman Sachs Group Inc. upgraded the shares to “buy” from “neutral,” saying a merger between the British company and Verizon Communications Inc. may be “attractive.”

Clariant AG advanced 3.2 percent to 10.52 Swiss francs after UBS AG said analysts have cut the company’s earnings estimates “too far.”

EasyJet Plc rose 3.1 percent to 395.2 pence after reporting a 13 percent increase in passenger numbers in December, compared with the same month in the previous year.

ITV Plc increased 2.7 percent to 71.35 pence as Morgan Stanley upgraded the U.K.’s largest terrestrial commercial broadcaster to “overweight” from “equal weight,” saying the media industry is in “structurally better shape with the long digital de-rating of the early 2000s now largely over.”

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

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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