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European stocks fell from their highest level in five weeks as the Federal Reserve cut its growth forecast for the U.S. economy and a survey indicated China’s manufacturing industry may shrink for an eighth month.
BHP Billiton Ltd. (BHP) and Anglo American Plc (AAL) retreated as commodity prices decreased. Invensys Plc (ISYS) plunged 14 percent, its largest retreat in five months, after saying it’s no longer in talks with third parties.
The Stoxx Europe 600 Index declined 0.5 percent to 248.4 at the close, after earlier climbing as much as 0.3 percent and dropping as much as 0.8 percent. The benchmark measure has fallen 8.8 percent from its high on March 16 amid concern that Greece will have to leave the euro currency union.
“The mood of market participants is still characterized by great uncertainty about future developments in Europe and the slowdown in China,” said Stefan Angele, head of investment management at Swiss & Global Asset Management Ltd. in Zurich, where he helps oversee about 80 billion Swiss francs ($84 billion). “On a positive note, with the current mood, all stocks have been pulled to the basement, even those companies that are profitable. There are some real bargains out there.”
The Stoxx 600 is trading at 10.4 times estimated earnings, according to data compiled by Bloomberg. The volume of shares changing hands in companies listed on the gauge was 15 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
The policy-setting Federal Open Market Committee yesterday extended its Operation Twist program, which aims to reduce borrowing costs. The Fed will swap $267 billion of short-term securities with longer-term debt through the end of 2012.
Fed officials predicted growth of 1.9 percent to 2.4 percent this year, down from an April forecast of 2.4 percent to 2.9 percent. Chairman Ben S. Bernanke said progress in the labor market has slowed. That signaled the Fed may add to its stimulus if the economy fails to create more jobs for 12.7 million unemployed Americans.
A Labor Department report showed that initial jobless claims decreased by 2,000 to 387,000 last week. That was more than the 383,000 forecast by economists surveyed by Bloomberg.
A release from the National Association of Realtors showed that sales of previously owned houses in the U.S. fell in May. Purchases dropped 1.5 percent to a 4.55 million annual rate last month. That missed the median forecast of 74 economists surveyed by Bloomberg News for a 4.57 million pace.
In China, a purchasing managers’ index from HSBC Holdings Plc and Markit Economics gave a preliminary reading of 48.1 for June, indicating that manufacturing in the world’s second- largest economy will shrink for an eighth month. Readings above 50 mean the industry expanded.
Greece’s new Prime Minister, Antonis Samaras, named Vassilios Rapanos, the chairman of the country’s biggest bank as finance minister today. Samaras was sworn in as prime minister yesterday, the country’s fourth premier since November, after his New Democracy party won a June 17 election with almost 30 percent of the vote.
Index provider MSCI Inc. put Greece’s stock market under review for reclassification as an emerging market yesterday. That may make the country the first developed market in the world to lose its status.
Euro-area finance ministers meet in Luxembourg today to discuss the currency zone’s sovereign-debt crisis.
Euro-area services and manufacturing output contracted for a fifth month in June, suggesting the economy may fail to grow in the current quarter. A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area held at 46, the same reading as in May, London-based Markit Economics said today. Economists had predicted a decline to 45.5, according to the median of 15 estimates in a Bloomberg News survey.
Spain sold more debt than planned just three days after the country’s 10-year bond yields hit a euro-era record. The nation sold 2.2 billion euros ($2.8 billion) of two-, three- and five- year securities today, compared with a maximum target of 2 billion euros set for the auction.
National benchmark indexes dropped in 16 of the 18 western- European (SXXP) markets. France’s CAC 40 decreased 0.4 percent. Germany’s DAX sank 0.8 percent, while the U.K.’s FTSE 100 slid 1 percent.
A gauge of European mining companies dropped for the first time in a week as a global commodity benchmark declined to its lowest level since 2010. BHP Billiton, the world’s biggest mining company, fell 3 percent to 1,819 pence. Anglo American lost 5.2 percent to 2,101 pence.
Invensys slumped 14 percent to 220 pence, its biggest decline since Jan. 13, after the British software and meters maker said it’s no longer in talks with Emerson Electric Co. or other potential suitors.
BP Plc (BP/) dropped 3.2 percent to 412.1 pence. Europe’s second- largest oil producer bid the most for 43 leases to drill in the Gulf of Mexico where two years ago its Macondo well exploded, causing the world’s largest accidental crude spill.
Royal KPN NV slid 5.3 percent to 7.48 euros after abandoning talks over a combination of its German business with a rival, increasing the likelihood that Carlos Slim’s America Movil SAB will succeed with an unsolicited 2.6 billion-euro bid for a stake in the Dutch phone operator. America Movil held 8.7 percent of KPN as of yesterday.
Air France-KLM Group rallied 5.5 percent to 3.63 euros, its highest price in more than a month, after announcing a plan to eliminate more than 5,000 jobs, equivalent to 10 percent of posts at the Air France unit.
Ashtead Group Plc (AHT), a U.K. equipment-rental company with most of its business in the U.S., rose 1.8 percent to 254.8 pence after the company said profit this year will probably exceed its previous forecast.
Sorin SpA (SRN) rallied 11 percent to 1.69 euros. Charterhouse Capital Partners LLP approached the company’s shareholders about buying the Italian maker of cardiovascular devices in a deal that would value Sorin at about 960 million euros, according to people with knowledge of the matter.
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