Bloomberg News

European Stocks Drop After U.S. Consumer Confidence Data

March 27, 2012

European stocks declined for the first time in three days, erasing an earlier advance, as confidence among U.S. consumers dropped and shares of energy companies retreated.

Total SA (FP) plunged the most since 2008 as a North Sea platform belonging to France’s largest oil producer leaked gas for a third day. Royal Bank of Scotland Group Plc (RBS) gained 3.3 percent as the U.K. government was said to have held talks to sell part of its stake to Middle Eastern sovereign-wealth funds.

The Stoxx Europe 600 Index (SXXP) retreated 0.5 percent to 266.92 at the close, after earlier advancing as much as 0.7 percent. The benchmark measure has still increased 9.2 percent this quarter, its biggest rally in the first three months of a year since 1998.

“Total is a heavyweight in the indexes, so it has a lot of impact,” said Lionel Heurtin, a fund manager at Ofi Asset Management in Paris, which oversees $67 billion. “The news reminds us of BP, so it’s normal to be cautious.”

BP Plc reached an estimated $7.8 billion settlement this month with businesses and individuals damaged in the 2010 Deepwater Horizon oil rig disaster that killed 11 people and led to the world’s largest accidental spill.

National benchmark indexes fell in 13 of the 18 western European markets. The U.K.’s FTSE 100 Index slipped 0.6 percent, while France’s CAC 40 Index declined 0.9 percent. Germany’s DAX Index was unchanged.

U.S. Consumer Confidence

In the U.S., the Conference Board’s consumer confidence index dropped to 70.2 in March from a revised reading of 71.6 in February that was higher than initially reported. The median forecast of economists surveyed by Bloomberg News had called for a decrease to 70.

A separate release showed that house prices in 20 U.S. cities dropped at a slower pace in January, indicating that the real-estate market is stabilizing. The S&P/Case-Shiller index of property values in 20 cities fell 3.8 percent from a year earlier, matching the median forecast of 32 economists surveyed by Bloomberg News.

The Stoxx 600 advanced yesterday after German business confidence unexpectedly climbed and Federal Reserve Chairman Ben S. Bernanke said that the U.S. continued to need accommodative monetary policy.

The VStoxx Index (V2X), which measures the cost of options on the Euro Stoxx 50 Index, snapped two days of losses, rising 5 percent to 22.4 today. The volume of shares changing hands on the Stoxx 600 was 1.5 percent higher than the 30-day average, according to data compiled by Bloomberg.

‘Decisive Measure’

European Central Bank President Mario Draghi said after stock markets closed yesterday that euro-area governments should continue to take “decisive measures.” The ECB has injected more than 1 trillion euros ($1.3 trillion) into the banking system since December.

“No single institution can carry the burden of addressing a set of challenges that are simultaneously economic, financial and fiscal,” Draghi said in Berlin yesterday. “The current stabilization should not make us pause in our responses.”

Finance ministers from the 17 nations using the euro meet in Copenhagen on March 30. Chancellor Angela Merkel said yesterday that Germany may let the euro’s temporary and permanent rescue funds run in parallel.

Total fell 6 percent to 38.56 euros, its biggest decline since December 2008, as the oil company assessed how to stop a leak from its Elgin platform in the U.K. North Sea. The rig supplied more than 1 percent of the U.K.’s gas last year, according to the Department of Energy and Climate Change.

PZ Cussons, Hochtief

PZ Cussons Plc (PZC) sank 9.8 percent to 301.3 pence, the largest drop on the Stoxx 600 (SXXP), after the company said that continuing tension in Nigeria will result in “the group’s overall performance being some way below expectations. Brokers from Numis Securities to Shore Capital downgraded the shares.

Hochtief AG (HOT), Germany’s largest construction company, slid 5.3 percent to 50.27 euros as trading in its Australian subsidiary Leighton was halted before a quarterly review.

Nutreco NV (NUO) dropped 6.5 percent to 53.89 euros after peer Marine Harvest ASA said it may produce 500,000 tons of salmon feed a year. Feed costs account for 50 percent of expenses for salmon farming.

Vestas Wind Systems A/S (VWS), the world’s largest wind-turbine maker, slid 4.6 percent to 58.15 kroner. Suzlon Energy Ltd. beat the Danish company to a contract to supply 54 six-megawatt turbines to PNE Wind AG’s Gode Wind I project.

‘‘I had expected Vestas would have landed this project, so it’s a shame for the company,” Jacob Pedersen, an analyst with Aabenraa, Denmark-based Sydbank A/S, said by phone.

RBS Shares Rally

RBS advanced 3.3 percent to 28.67 pence as two people familiar with the matter said that the U.K. government has held talks about selling part of its stake in the lender. The U.K. Treasury said that it will only sell the government’s holding when it obtains maximum value for taxpayers.

“The aim is to repair and return RBS to full health so that it is able to support the U.K. economy in the future, and the current strategy is working to achieve that,” the Treasury in London said in an e-mailed statement. “The government’s policy has always been to return RBS to the private sector, but only when it delivers value for money for the taxpayer.”

Deutsche Lufthansa AG (LHA) added 2.2 percent to 10.70 euros. JPMorgan Chase & Co. raised its recommendation on the company to overweight from neutral, meaning that investors should own a larger proportion of the shares than are represented in benchmark indexes.

Kazakhmys, Finmeccanica

Kazakhmys Plc (KAZ), Kazakhstan’s biggest copper producer, rose 2.1 percent to 944.5 pence after saying that earnings before interest, taxes, depreciation and amortization, excluding special items, rose 3.2 percent to $2.93 billion in 2011. The company also posted a decline in profit for the year.

Finmeccanica SpA (FNC), an Italian planemaker, climbed 11 percent to 3.85 euros for the biggest rally on the Stoxx 600 (SXXP). Hitachi Ltd. has held advanced talks with Finmeccanica to buy 50 percent of AnsaldoBreda SpA and 29 percent of Ansaldo STS SpA, Il Sole 24 Ore said. Finmeccanica is scheduled to report its earnings tonight.

Accor SA (AC), Europe’s biggest hotel company, advanced 3.7 percent to 26.82 euros. The stock was raised to buy from hold at Societe Generale SA.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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