Bloomberg News

Most European Stocks Decline Before Fed Minutes Released

July 11, 2012

Most European stocks fell before the release of minutes from the latest Federal Reserve meeting, as investors waited for clues about further measures to spur economic growth.

Burberry Group Plc (BRBY) tumbled to its lowest this year after quarterly sales growth missed projections. UniCredit SpA and BNP Paribas SA led bank shares higher. Getinge AB (GETIB) rose 3.9 percent after saying it expects “significant improvement” in second- half earnings growth.

The Stoxx Europe 600 Index dropped less than 0.1 percent to 255.59 at the close of trading. Two out of three shares on the gauge slid. The benchmark measure yesterday rose for the first time in a week as manufacturing in the U.K. and Italy unexpectedly rose.

The Fed will release the minutes of the June meeting at 2 p.m. in Washington. The Federal Open Market Committee said on June 20 it will expand its Operation Twist program to extend the maturities of assets on its balance sheet.

“All eyes are now on the FOMC minutes, in the hope that the Fed is ready to take further steps to prop up the U.S. economy,” said Stephane Ekolo, chief European (SXXP) strategist at Market Securities in London. “There is no clear direction in the market and the main catalyst is definitely the FOMC minutes.”

National benchmark indexes fell in 11 of the 18 western European markets. The U.K.’s FTSE 100 rose less than 0.1 percent. France’s CAC 40 lost 0.6 percent, while Germany’s DAX gained 0.2 percent.

European Earnings

Companies in the Stoxx 600 will earn 23.95 euros a share in fiscal 2012, according to analyst estimates compiled by Bloomberg. The projections have been cut from more than 25 euros a share at the start of the year, the data show.

“We are cautious, but in some cases, the negative results are priced in,” said Benoit de Broissia, a Paris-based analyst at KBL Richelieu Gestion, which oversees about $3.4 billion. “Globally, excluding a prolonged recession, stocks aren’t expensive. But, there’s a lot of uncertainty.”

In the U.S., profits for S&P 500 companies fell 1.8 percent in the second quarter, according to analyst estimates compiled by Bloomberg. That would be the first decline since 2009, even as revenue is forecast to rise 2.5 percent. Analysts project profit growth of 3.9 percent and 15 percent, respectively, in the third and fourth quarters of 2012.

Luxury Goods

Burberry Group, the U.K.’s largest luxury-goods maker, declined 7.4 percent to 1,189 pence, its lowest this year. The company reported a slowdown in first-quarter sales growth that trailed analysts’ estimates as revenue from its licensing business fell, signaling a possible slowdown for the industry.

Tod’s SpA (TOD), the Italian maker of pink alligator loafers, lost 4.8 percent to 72.15 euros. LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s biggest luxury-goods company, fell 3.2 percent to 116.65 euros. PPR (PP) SA, the French owner of Gucci, retreated 3.5 percent to 109.50 euros.

Britvic, the maker of Robinsons fruit drinks, plunged 13 percent to 260.1 pence, the biggest drop since March 2006, after saying full-year results will be “at the bottom end” of analysts’ estimates and a recall of its Fruit Shoot products will hurt earnings further.

SBM Offshore NV (SBMO) slid 6.6 percent to 10.47 euros. SBM’s jack-up rig in the Yme oilfield in the North Sea was evacuated after cracks were found in cement supporting the legs, Upstream reported late yesterday.

Mediaset SpA (MS) retreated 3.3 percent to 1.31 euros. The broadcaster controlled by former Italian Prime Minister Silvio Berlusconi was cut to sell from hold at Societe Generale.

A gauge of bank shares gained 0.7 percent for the third- best performance among the 19 industry groups in the Stoxx 600. UniCredit climbed 2.3 percent to 2.79 euros. BNP Paribas advanced 1.5 percent to 29.94 euros.

Getinge, a Swedish sterilization-systems maker, rose 3.9 percent to 179.90 kronor. The company said the earnings outlook for 2012 remained favorable as there will be a significant improvement in profit growth in the second quarter.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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