Bloomberg News

European Stocks Decline as Japan Swings to Trade Deficit

August 22, 2012

European Stock Futures Retreat Before Euro-Crisis Consultations

Futures on the Euro Stoxx 50 Index, a benchmark for the euro region, decreased 0.8 percent to 2,470 at 7:09 a.m. in London. Photographer: Ralph Orlowski/Bloomberg

European stocks slid, paring yesterday’s gain, as Japan reported a wider-than-expected trade deficit and investors awaited the outcome of meetings between the leaders of euro-area countries. U.S. index futures and Asian stocks also fell.

Heineken NV (HEIA), which last week raised an offer to gain control of Asia Pacific Breweries Ltd., slipped 2.9 percent after posting first-half earnings that missed analysts’ estimates because of higher costs. STMicroelectronics NV (STM) retreated 1.2 percent after Dell Inc. (DELL:US) cut its profit projection for this year on diminishing demand for personal computers.

The Stoxx Europe 600 Index (SXXP) declined 0.7 percent to 270.58 at 8:30 a.m. in London. Future contracts on the Standard & Poor’s 500 Index expiring in September dropped 0.3 percent, while the MSCI Asia Pacific Index slipped 0.5 percent.

“While everyone seems to be singing from the same song sheet, with the exception of the Bundesbank, the market now waits to hear any rhetoric from Jean-Claude Juncker’s outing to Greece and the Francois Hollande/Angela Merkel, Angela Merkel/ Antonis Samaras meetings over the coming days,” Chris Weston, an institutional trader at IG Markets in Melbourne, wrote in a note to clients today. “It will set the stage for the September European Central Bank meeting and European Union summit, when we will need to hear details.”

Stocks’ Rally

European stocks advanced yesterday as Spain’s borrowing costs fell at a debt sale. The Stoxx 600 index rose to its highest level since July 2011 last week, its 11th consecutive week of gains, as optimism mounted that the currency zone’s central bankers and politicians would act to protect lenders and as U.S. consumer sentiment and leading economic indicators exceeded forecasts.

Japan had a trade deficit of 517.4 billion yen ($6.5 billion) in July as the euro area’s sovereign-debt crisis and a slowdown in China dragged down exports, a report from the country’s Finance Ministry showed. That compared with a 60.3 billion yen surplus in June and a 270 billion yen forecast deficit in a Bloomberg News survey of 28 analysts.

In Athens, Luxembourg’s Prime Minister, Juncker, who also heads the group of euro-area finance ministers, visits Greek Prime MinisterSamaras to hear a request for a two-year extension to the country’s fiscal-adjustment program. French President Hollande and German Chancellor Merkel meet in Berlin tomorrow.

If Samaras shows a willingness to meet the main targets of his country’s second bailout, the other governments in the currency zone may agree to minor concessions, a senior lawmaker with Merkel’s government said yesterday.

House Sales

In the U.S., a report today may show that sales of existing properties rose to a 4.51 million annual pace in July from a 4.37 million pace in June, economists predicted. A release tomorrow will show purchases of new house climbed to a 365,000 rate last month from a 350,000 pace in June, according to the median forecast of economists surveyed by Bloomberg.

A Commerce Department report on Aug. 24 may show that durable-goods orders increased 2.5 percent, the most this year, economists projected.

Heineken slipped 2.9 percent to 43.21 euros after the world’s third-largest brewer said costs to produce its beer will climb 8 percent this year, rather than the 6 percent increase that it had forecast.

The company posted earnings before interest and taxes, excluding some items, of 1.27 billion euros ($1.6 billion). That compared with the 1.31 billion-euro average estimate for profit on that basis in a Bloomberg survey of 10 analysts. The figure represents a so-called organic decrease of 5.5 percent, compared with the median estimate of 9 analysts for a 0.5 percent increase.

RBS Slips

Royal Bank of Scotland Group Plc (RBS), Britain’s biggest taxpayer-owned lender, slid 1.8 percent to 233.2 pence.

STMicroelectronics NV retreated 1.2 percent to 4.79 euros after Dell forecast (DELL:US) fiscal 2013 profit of $1.70 a share, less than the company’s February projection of at least $2.13 a share. The personal-computer maker also predicted third-quarter revenue that missed analysts’ estimates.

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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