Bloomberg News

European Stocks Fall as U.S. Home Sales Unexpectedly Drop

April 19, 2012

European stocks fell for a second day as reports showed that sales of previously owned houses dropped and more Americans than forecast filed claims for unemployment benefits.

Publicis Groupe SA (PUB) dropped as France’s largest advertising company said growth will slow this quarter. Nokia Oyj tumbled to a 15-year low after reporting an operating loss of 1.34 billion euros ($1.8 billion). SKF AB (SKFA), the world’s biggest maker of ball bearings, rose 4.9 percent after forecasting higher sales in the U.S. and Asia.

The Stoxx Europe 600 Index (SXXP) retreated 0.5 percent to 256.51 at the close, after earlier rallying as much as 1 percent. The gauge has lost 2.6 percent so far in April on renewed concern that the euro area’s sovereign-debt crisis will worsen. The Stoxx 600 has still advanced 4.9 percent this year.

“U.S. data continued to disappoint today,” said Craig Erlam, a London-based market analyst at Alpari U.K. “The data wiped out any gains made in the morning from the successful Spanish bond auction. Sentiment is low and it won’t take much to restart the down trend.”

National benchmark indexes fell in 14 of the 17 western- European markets that were open today. France’s CAC 40 Index declined 2.1 percent and Germany’s DAX Index declined 0.9 percent. The U.K.’s FTSE 100 Index lost less than 0.1 percent. Spain’s IBEX 35 Index retreated 2.4 percent to extend a three- year low.

The volume of shares changing hands on the Stoxx 600 was 8.8 percent higher than the average of the last 30 days, according to data compiled by Bloomberg. The benchmark measure retreated 0.7 percent yesterday, paring the gauge’s 2 percent jump on April 17.

U.S. Jobless Claims

In the U.S., a Labor Department report showed jobless claims fell to 386,000 from a revised 388,000 the previous week that was higher than initially estimated. The median forecast of 47 economists surveyed by Bloomberg News had called for a drop to 370,000.

A separate release showed that sales of previously owned houses unexpectedly dropped in March. Purchases declined to a 4.48 million annual rate from 4.6 million in February. That missed the median estimate of 72 economists in a Bloomberg News survey for an increase to sales of 4.61 million.

Stocks initially rallied after Spain sold 2.54 billion euros of two- and 10-year bonds at an auction, meeting the government’s maximum target of 2.5 billion euros. France also raised 10.5 billion euros of debt out of a planned 11 billion euros today as risks linked to the country’s presidential election drove up yields.

Agence France Tresor, the country’s debt-management body, auctioned 2.7 billion euros of benchmark five-year debt at an average yield of 1.83 percent, compared with 1.78 percent on March 15.

European Borrowing Costs

Both countries have come under increased scrutiny from investors as the effect of the European Central Bank’s longer- term refinancing operation fades. The ECB has injected 1 trillion euros of liquidity into the region’s financial system.

The yield on Spain’s benchmark 10-year bond has jumped as much as 1 percentage point since the beginning of March, while the yield on the equivalent French security has gained about 10 basis points.

Publicis, Chr. Hansen

Publicis sank 4.1 percent to 38.48 euros in Paris. The company said sales growth will slow after it lost a contract for General Motors Co. and as some clients cut spending. First- quarter sales rose 13 percent to 1.45 billion euros from a year earlier, Publicis said. Excluding acquisitions, sales grew 4.1 percent.

Nokia declined 3.6 percent to 2.92 euros, its lowest price since 1997, after the company reported a first-quarter operating loss, burdened by costs at the unprofitable equipment venture with Siemens AG.

The loss includes 1.1 billion euros in one-off charges, of which 772 million euros were for Nokia Siemens Networks. Revenue fell 29 percent to 7.35 billion euros, the lowest since 2004, as handset sales slumped in emerging markets and margins in smartphones shrank.

SKF jumped 4.9 percent to 165.50 kronor, its biggest gain in six weeks, after the world’s largest maker of ball bearings said that sales rose 1.4 percent to 16.9 billion kronor ($2.5 billion) in the first quarter.

In the second quarter, “the main growth will be in the Americas, but we also expect a continued improvement in Asia and a stable development in Europe,” Chief Executive Officer Tom Johnstone said in a statement.

GlaxoSmithKline Advances

GlaxoSmithKline Plc (GSK) gained 0.9 percent to 1,454 pence after Human Genome Sciences Inc. rejected an unsolicited $2.59 billion offer from the U.K.’s largest drugmaker.

The U.S.-based company said that Glaxo’s $13-a-share cash offer failed to reflect the company’s value.

Chr. Hansen A/S, the maker of natural food colors and cheese cultures, surged 7.5 percent to 155.50 kroner, the highest price since its public relisting in June 2010. Chief Executive Officer Lars Frederiksen said that the company will buy back as much as 80 million euros of shares after failing to find any acquisition targets.

Ladbrokes Plc (LAD), the second-biggest U.K. betting group, soared 6.5 percent to 173.4 pence after predicting profit growth in its digital offering in the second half of 2012.

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


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