Bloomberg News

European Stocks Are Little Changed; Iberdrola Shares Fall

July 04, 2012

European Stocks Decline, Pulling Stoxx 600 From Two-Month High

A visitor passes a red stock index curve displayed on an electronic screen at the Hellenic stock exchange in Athens. Photographer: Chris Ratcliffe/Bloomberg

European stocks were little changed as speculation that central banks will ease monetary policy offset service-industry measures in the U.K. and Germany that missed economists’ forecasts.

Iberdrola (IBE) SA tumbled 5.6 percent as utilities dropped. Chr. Hansen A/S, the maker of natural food colors and cheese cultures, climbed 12 percent after reporting earnings that exceeded estimates. Societe Television Francaise 1 (TFI) advanced after UBS AG (UBSN) advised buying the shares.

The Stoxx Europe 600 Index slipped less than 0.1 percent to 257.33 in London, after rallying 5.2 percent over the previous three days. The gauge is still on course for a fifth straight week of gains, the longest stretch since January, as European leaders agreed to address flaws in their bailout programs to ease the sovereign-debt crisis and speculation grew that central banks will take steps to boost the economy.

“Seeing equities fall back after a 7 percent rise as a result of the summit meeting last week suggests that common sense is returning to the market,” said Henrik Drusebjerg, a strategist at Nordea Bank AB in Copenhagen. “If investors are hoping that tomorrow’s central bank meetings will see initiatives on top of lowering interest rates, they will be disappointed.”

The European Central Bank and the Bank of England will announce interest-rate decisions tomorrow. ECB officials will cut their benchmark rate by 25 basis points to a record low 0.75 percent, according to the median forecast in a Bloomberg survey of 62 economists. Five predict a cut of 50 basis points and 11 foresee no change.

Benchmark Indexes

National benchmark indexes fell in 10 of the 18 western European markets. Germany’s DAX slipped 0.2 percent, while France’s CAC 40 and the U.K.’s FTSE 100 each lost 0.1 percent.

The number of shares changing hands in Stoxx 600 companies was 38 percent less than the average over the past 30 days, according to data compiled by Bloomberg. U.S. equity markets were closed for the Independence Day holiday today.

A U.K. gauge of services activity based on a survey of purchasing managers fell to 51.3 in June, an eight-month low, from 53.3 in May, Markit Economics and the Chartered Institute of Purchasing and Supply said. The median forecast of 25 economists in a Bloomberg survey was for a reading of 52.9. A measure above 50 indicates expansion.

A German services PMI dropped to 49.9 last month from 51.8 in May, according to a separate report from Markit.

U.S. Payrolls

A report on July 6 is forecast to show that U.S. employers added 90,000 people to payrolls in June, after a gain of 69,000 in May, according to a Bloomberg survey of 78 economists. Alcoa Inc., America’s biggest aluminum producer, is due to kick off the U.S. earnings-reporting season on July 9.

“If the U.S. non-farm figures on Friday add to the disappointing figures that we have seen this week it would confirm that the U.S. slowdown is really happening,” Nordea’s Drusebjerg said.

The Stoxx 600 had climbed to the highest level since May 3 after European policy makers eased repayment rules for Spanish banks, relaxed conditions for possible aid to Italy and unveiled a $149 billion economic growth plan.

“The measures to support growth and help the banks via the European Stability Mechanism are a step in the right direction but we are a long way from finding a solution,” said Felicity Smith, a fund manager at Bedlam Asset Management Plc in London. “The markets are waiting to see some concrete steps.”

Iberdrola Drops

Iberdrola, an owner of wind parks from Europe to the U.S., sank 5.6 percent to 3.52 euros as a measure of utilities in the Stoxx 600 retreated 0.5 percent.

Chr. Hansen climbed 12 percent to 171.6 kroner in Copenhagen, the biggest gain since the shares started trading in June 2010. The company reported third-quarter earnings before interest and taxes that exceeded estimates and raised its full- year forecasts.

TF1 advanced 3.5 percent to 6.76 euros. UBS upgraded the owner of France’s most-watched television channel to buy, saying the shares look cheap.

Mediaset SpA (MS), the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi, advanced 5.6 percent to 1.46 euros. The stock climbed following an Il Sole report that RTL Group and Al-Jazeera are seeking a partnership with the company for pay television.

Man Group Plc (EMG), the world’s largest publicly traded hedge fund, lost 4.7 percent to 67.55 pence, the lowest price since October 1999, as the net asset value of its Man AHL Diversified fund decreased 2.5 percent last week.

JPMorgan Chase & Co. cut its price estimate for the shares to 45 pence from 110 pence, saying the company’s second-quarter performance was disappointing. The brokerage kept its neutral recommendation on Man.

EON AG dropped 1.6 percent to 16.92 euros after analysts downgraded the shares. Germany’s biggest utility was cut to neutral from overweight at JPMorgan, while Citigroup Inc. reduced its recommendation to sell from neutral.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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


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