Bloomberg News

European Stocks Retreat After U.S. Jobs Trail Estimates

April 10, 2012

European stocks tumbled to a two- month low amid mounting concern about the region’s debt crisis and as a U.S. report showed employers in the world’s largest economy added fewer jobs in March than forecast.

UniCredit SpA (UCG), Intesa Sanpaolo SpA and Banca Popolare Di Milano Scarl (PMI) dropped more than 6.5 percent. Banco Santander SA (SAN) declined as Spanish bond yields rose and the country’s government increased its efforts to bring the country’s deficit under control. Vedanta Resources Plc (VED) led a retreat in mining companies as copper fell in London and the metal producer reported lower iron-ore sales.

The Stoxx Europe 600 Index dropped 2.5 percent to 252.57 at the close in London, its lowest since Jan. 30. European markets were closed yesterday for the Easter Monday holiday. The volume of shares changing hands in the gauge’s companies was 7.6 percent higher today than the average of the last 30 days.

“Last week’s poor jobs report raises doubts about the strength of the U.S. expansion,” Dan Morris, a global strategist at JPMorgan Asset Management in London, wrote in a report to clients. “There are some uncomfortable parallels between the current macroeconomic environment and that of July last year when equity markets began their precipitous fall. Investors are worried again about the euro-zone crisis.”

U.S. Jobs Report

Stocks dropped around the world after a report showed that American employers added 120,000 jobs in March, the fewest in five months and less than the median economist forecast of 205,000 in a Bloomberg survey. The amount had exceeded 200,000 for three straight months.

U.S. and European (SXXP) equity markets were shut for the Good Friday holiday on April 6, when the Labor Department released its employment report.

National benchmark indexes fell in every western-European market except Greece, where the ASE Index jumped 3.2 percent, and Iceland. France’s CAC 40 slid 3.1 percent, while the U.K.’s FTSE 100 decreased 2.2 percent and Germany’s DAX slipped 2.5 percent. Spain’s IBEX 35 (IBEX) plunged 3 percent to its lowest level since March 2009, while Italy’s FTSE MIB sank 5 percent.

The Stoxx 600 dropped 1.6 percent last week after minutes from the Federal Reserve damped expectations for further monetary stimulus and Spain sold fewer bonds at an auction than it had targeted. The gauge jumped 7.7 percent in the first quarter after the European Central Bank lent 1 trillion euros ($1.3 trillion) to the region’s financial firms.

Italian Banks Tumble

Italian banks led a gauge of European lenders lower, with UniCredit, the country’s biggest bank, dropping 8.1 percent to 3.04 euros and Intesa Sanpaolo SpA (ISP) falling 7.9 percent to 1.14 euros. Banca Popolare di Milano Scarl slumped 6.8 percent to 32.82 euro cents.

A2A SpA declined 8.2 percent to 51.15 euro cents, its lowest price since at least 1998, as it traded for the first day after Standard & Poor’s cut the company’s long-term corporate, senior unsecured ratings to BBB from BBB+ and kept its outlook negative. Equita called it “bad news” as the company has to refinance at the end of 2013 and in early 2014.

STMicroelectronics NV (STM) dropped 8.2 percent to 5.33 euros after the chipmaker cut its first-quarter gross-margin forecast. The company said that an arbitration panel ordered it to pay $59 million to NXP Semiconductors Netherlands NV, a supplier.

Elsewhere, Santander lost 3.9 percent to 5.20 euros, Banco Bilbao Vizcaya Argentaria SA (BBVA) slid 3.6 percent to 5.40 euros and Banco Popular Espanol SA retreated 3.5 percent to 2.50 euros.

Spain’s bond yields rose today, after surging the most since January last week, amid concern that the country may join Greece, Ireland and Portugal in requesting a bailout.

Rajoy Meets Ministers

Prime Minister Mariano Rajoy met with his health and education ministers yesterday to discuss cuts of more than 10 billion euros, according to an e-mailed statement. The government reiterated its pledge to reduce the deficit to 3 percent of gross domestic product next year and said it will accelerate its sale of stakes in lenders under government administration.

El Confidencial reported Spain’s government has proposed that banks advance eight years of funds to the country’s deposit-guarantee fund to pay for the sale of seized lenders.

Vedanta fell 6.5 percent to 1,155 pence as base metals declined in London and the company said fourth-quarter iron-ore sales fell to 5.2 million tonnes from 6.4 million tones a year earlier because of a continued mining ban in Karnataka, India.

Copper retreated after a report showed that China imported less metal in March than a month earlier, stoking concern that demand may be weakening in the world’s largest user.

Xstrata, Rio Tinto

Xstrata Plc (XTA) declined 4.1 percent to 1,066.5 pence and Antofagasta Plc decreased 5.1 percent to 1,072 pence. Rio Tinto Group, the world’s third-biggest mining company, lost 4.5 percent to 3,306 pence.

SBM Offshore NV (SBMO) tumbled 12 percent to 13.68 euros, for the largest decline on the Stoxx 600, after the world’s biggest supplier of floating oil and gas platforms said it has hired forensic accountants to investigate sales practices that may have been improper.

Marine Harvest ASA (MHG), the world’s largest salmon farmer, declined 7.5 percent to 2.77 kroner amid concern that salmon supply is outstripping demand.

Henning Lund, an equity analyst at RS Platou Markets in Oslo said that salmon supply may rise 25 percent year-on-year in the second quarter as output in Chile rebounds and Norway produces more of the fish than estimated.

Randgold, Eurobank Rally

Randgold Resources Ltd. (RRS) jumped 5.2 percent to 5,425 pence, its biggest rally since November, after the leader of Mali’s military junta, Amadou Sanogo, said that he will honor an agreement to hand over power to a temporary government. Randgold welcomed the political settlement in a statement today and said its production guidance for 2012 remained unchanged.

EFG Eurobank Ergasias SA (EUROB) led a rally in Greek banks, surging 29 percent to 66.9 euro cents. Greece’s second-biggest lender yesterday agreed to sell its Turkish unit for $357 million to increase its capital in the wake of losses on Greek government debt. National Bank of Greece SA (ETE), the Mediterranean nation’s largest lender, climbed 24 percent to 2.05 euros, while Piraeus Bank SA, Greece’s fourth-biggest lender, jumped 27 percent to 33.1 cents.

Greek Prime Minister Lucas Papademos said on April 6 that the lenders will announce their plans to recapitalize on April 20. The banks lost money when the country held a debt swap.

Cove Energy Plc (COV) gained 4.2 percent to 219 pence, its highest price in more than a month, after Mozambique set the level of capital-gains tax on sales of natural-gas assets in the country at 12.8 percent.

“The rate is very good and a lot less than the market was expecting,” said Gerry Donnelly, an analyst at FirstEnergy Capital in London.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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


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