Bloomberg News

European Stocks Drop as U.S. Payrolls Miss Estimates

May 02, 2012

European (SXXP) stocks declined for the second time in three days after reports showed that U.S. employers added fewer payrolls than forecast and euro-area unemployment rose to a 15-year high.

Vestas (VWS) Wind Systems A/S slumped to an almost nine-year low after saying it’ll spend more money on turbine maintenance. Banco Santander SA led banks lower as European sovereign-bond yield spreads over German bunds widened. UBS AG (UBSN), the biggest bank in Switzerland, jumped 3.7 percent after first-quarter results beat analysts’ estimates.

The Stoxx Europe 600 Index lost 0.4 percent to 257.39 at the close of trading, after earlier climbing as much as 1 percent. The benchmark gauge rose 0.4 yesterday after a report showed U.S. manufacturing expanded in April. All western European markets except the U.K., Ireland and Denmark were closed yesterday for May Day Holiday.

“The employment growth continues, though at a moderate pace,” Ralf Umlauf, head of floor research at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in e-mailed comments. “With regard to the Friday publication of the official jobs report, the indications are mixed. It seems there is a slight potential for disappointment.”

U.S. companies added the fewest number of workers in seven months in April, a private report showed. Employment increased by 119,000 following a revised 201,000 gain the prior month, according to figures from Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for a 170,000 advance.

Euro-Area Jobs

Euro-region unemployment rose to a 15-year high and manufacturing contracted for a ninth month, separate reports showed today. The jobless rate in the 17-nation euro area increased to 10.9 percent in March from 10.8 percent in February, the European Union statistics office in Luxembourg said. That’s the highest since April 1997, according to Bloomberg News data.

In China, a survey released by HSBC Holdings Plc and Markit Economics indicated that output at small and medium-sized enterprises contracted. That contrasts with a report yesterday that showed Chinese manufacturing expanded last month at the fastest pace in a year.

National benchmark indexes fell in 15 of the 18 western European markets today. France’s CAC 40 rose 0.4 percent, the U.K.’s FTSE 100 slid 0.9 percent and Germany’s DAX (DAX) retreated 0.8 percent. Spain’s IBEX 35 Index dropped 2.6 percent to 6,831.90, its lowest level since March 2009.

Bond Spreads Widen

A gauge of banks performed the worst of the 19 industry groups on the Stoxx Europe 600 after spreads between German 10- year government bonds and Italian and Spanish securities expanded.

European Union finance ministers are meeting in Brussels today amid disagreements on how governments can force banks to set aside more capital than the minimum required by international accords.

Nations are divided over proposals by Michel Barnier, the EU’s financial-services chief, to fix banks’ core capital requirements at 7 percent of their risk-weighted assets, with limited exceptions for national regulators to set higher thresholds.

Banco Santander SA (SAN) and UniCredit SpA (UCG), the biggest lenders in Spain and Italy, declined 3.3 percent to 4.56 euros and 5.7 percent to 2.84 euros, respectively.

UBS Wealth Management

UBS rose 3.7 percent to 11.75 Swiss francs after the lender attracted more funds from wealthy clients in the first quarter than analysts estimated. UBS said its wealth management units attracted 10.9 billion Swiss francs ($12 billion) in net new funds, more than the 8.8 billion-franc estimate of analysts surveyed by Bloomberg.

STMicroelectronics, Europe’s biggest semiconductor maker, gained 1.3 percent to 4.34 euros after Goldman Sachs Group Inc. advised clients to buy the shares and Citigroup Inc. said investors should hold them rather than sell.

British Sky Broadcasting Group Plc (BSY) climbed 1.5 percent to 701.5 pence. The U.K.’s biggest pay-TV operator said operating profit in the nine months ended March rose 20 percent.

Earnings before interest, taxes, depreciation, and amortization increased to 1.19 billion pounds ($1.9 billion). Sales jumped 5 percent to 5.08 billion pounds.

Standard Chartered Growth

Standard Chartered, the U.K.’s second-largest bank by market value, declined 3.9 percent to 1,453 pence. The lender said it had “high single-digit” revenue growth in the first quarter, driven by consumer and wholesale-banking operations.

Operating profit expanded by a “low double-digit” rate from a year earlier, the London-based lender said today in a statement to the Hong Kong stock exchange, without providing specific figures.

Vestas, the biggest wind turbine maker, declined 5.6 percent to 48.15 kroner, the lowest closing price since May 28, 2003. The company said its loss widened 91 percent in the quarter as it expects to spend more money on turbine maintenance after uncovering potential faults in 376 machines.

Home Retail Group Plc (HOME), the U.K. owner of the Argos and Homebase chains, plunged 13 percent to 87.55 pence after reporting annual profit falling 60 percent as it sold fewer consumer electronics and big-ticket items like kitchens and said it won’t pay a final dividend.

So-called benchmark pretax profit fell to 102 million pounds ($165 million) in the 52 weeks ended Feb. 25, the Milton Keynes, England-based retailer said in a statement.

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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