Bloomberg News

European Stocks Are Little Changed Before EU Leaders Meet

August 24, 2012

European (SXXP) stocks were little changed before meetings between euro-area leaders. Asian stocks fell, while U.S. index futures were little changed.

HSBC Holdings Plc (HSBA), which is under investigation by U.S. regulators for laundering funds of sanctioned nations including Iran and Sudan, fell 0.7 percent as it’s said to be in talks to settle the matter. NKT Holding (NKT) A/S slumped 9.5 percent after second-quarter sales missed estimates.

The Stoxx 600 rose less than 0.1 percent to 267.80 at 8:05 a.m. European stocks are heading toward a 1.9 percent drop this week, which would snap 11 weeks of gains. The equity benchmark has still rallied 15 percent from this year’s low on June 4. The MSCI Asia Pacific Index (MXAP) slid 1.2 percent, while Standard & Poor’s 500 Index futures added 0.1 percent.

“European markets look set to see modest downside,” Chris Weston, an institutional trader at IG Markets in Melbourne, wrote in a note to clients. “The focus clearly turns to the meeting between Angela Merkel, Francois Hollande and Antonis Samaras, where it seems the French and German leaders will try and coordinate a response and encourage the Greek to pursue pre- agreed targets.”

The Stoxx 600 declined yesterday as German Finance Minister Wolfgang Schaeuble damped optimism that Greece will get more time to cut its debt and as bond yields climbed in Spain.

Coordinated Approach

German Chancellor Angela Merkel said she and French President Francois Hollande will coordinate on their approach to Greece to keep pressure on the country at the heart of Europe’s debt crisis to overhaul its economy.

Merkel, speaking to reporters in Berlin before hosting a working dinner with the French president, said they will discuss “how to receive our colleague,” Greek Prime Minister Antonis Samaras, who visits the German capital today and Paris tomorrow.

“It’s important to me that we all stand by our obligations and wait for the troika report and see what the result is,” Merkel said in a prepared statement late yesterday, referring to a report due next month on Greece’s progress in meeting its bailout terms. “We, and I, will encourage Greece to pursue the path of reform that demands a lot from the people.”

Germany should stick to its strict position with Greece because delaying measures won’t help anyone, Dutch Finance Minister Jan Kees de Jager said in an interview with the Financial Times Deutschland. He said that it was becoming increasingly difficult to explain the aid to a domestic audience, according to the newspaper.

Durable Goods

In the U.S., a Commerce Department report at 8:30 a.m. New York time may show that orders for durable goods rose 2.5 percent in July, the most this year, after a 1.3 percent increase the previous month, according to the median forecast of 75 economists in a Bloomberg News survey.

HSBC lost 0.7 percent to 555.1 pence as it’s in talks to settle an investigation for laundering funds of sanctioned nations including Iran and Sudan, two people with knowledge of the case said.

The bank, Europe’s largest by market value, made a $700 million provision in July for any U.S. fines after a Senate Committee found it had given terrorists and drug cartels access to the U.S. financial system. That sum might increase, Chief Executive Officer Stuart Gulliver has said.

Separately, HSBC’s long-term credit rating outlook was cut to negative from stable by Standard & Poor’s late yesterday, which questioned whether the lender is too big to be managed effectively in the wake of regulatory scandals in the U.S. and Europe.

NKT Holding tumbled 9.5 percent to 190 kroner after the maker of cables and industrial vacuum cleaners reported second- quarter sales of 3.9 billion kroner ($667 million), missing analysts’ estimates that called for 4.15 billion kroner. Earnings before interest, taxes, depreciation and amortization were 229 million kroner. That was below the 300 million-kroner analyst projection.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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


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