Bloomberg News

uropean Stocks Swing Between Gains, Losses Before ECB

September 05, 2012

European stocks fluctuated before tomorrow’s European Central Bank meeting, and as officials briefed on the proposal said ECB President Mario Draghi’s bond- buying plans involve unlimited government debt purchases that will be sterilized to assuage concerns about printing money.

Cie. Financiere Richemont SA, the maker of Cartier jewellery, gained 1.5 percent after reporting five-month sales rose 23 percent, matching analysts’ estimates. BP Plc (BP/) fell 2.8 percent after reports the U.S. Justice Department accused the oil company of gross negligence. STMicroelectronics NV, the biggest European chipmaker, dropped 4.5 percent as UBS AG and Exane BNP Paribas recommended selling the stock.

The Stoxx Europe 600 Index rose less than 0.1 percent to 265.51 at 2:56 p.m. in London after swinging between gains and losses at least 12 times. Stocks retreated the most in two weeks yesterday as U.S. manufacturing unexpectedly contracted in August. The equity benchmark has still surged 14 percent from its lowest level this year on June 4 amid speculation that central banks will do more to support growth.

“We are coming into the eye of the storm with regards to event risk, and today will really be the last day traders can tweak portfolios ahead of the key ECB meeting and U.S. payrolls on Friday,” said Chris Weston, an institutional dealer at IG Markets in Melbourne, in a note to clients. “After last night’s adjustment to expectations to the upcoming ECB meeting, we feel the market has a more neutral approach to what is likely to be delivered.”

Draghi Plan

Under Draghi’s proposed blueprint, which may be called “Monetary Outright Transactions,” the ECB would refrain from setting a public cap on yields, according to two central bank officials, and a third official, who spoke on condition of anonymity. The plan will only focus on government bonds rather than a broader range of assets and will target short-dated maturities of up to about three years, two of the people said.

An ECB spokesman referred to an Aug. 20 statement in which the Frankfurt-based central bank said it was misleading to report on decisions that haven’t been taken yet.

Draghi told the European (SXXP) Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in the fragmented euro-area economy and ensure the survival of the common currency. Policy makers will start deliberating on the plan later today and Draghi will announce whether it has been agreed to at a press conference tomorrow.

Retail Sales

European retail sales dropped in July as the region’s deepening economic slump eroded consumer demand from Germany to Spain. Sales slipped 0.2 percent from June, when they rose 0.1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a decline of 0.2 percent, according to the median of 21 estimates in a Bloomberg News survey. From a year earlier, sales dropped 1.7 percent.

U.S. data will show payrolls in the world’s biggest economy probably grew at a slower pace in August and unemployment exceeded 8 percent for a 43rd month, economists said before a report from the Labor Department on Sept. 7.

Richemont (CFR) rose 1.5 percent to 60.05 Swiss francs. The world’s largest jewelry maker said growth has slowed on a monthly basis, after reporting higher five-month revenue as the dollar’s strength boosted the value of sales in that currency. Increased revenue from Europe is offsetting slower growth in China, where demand has eased, the company said.

Sales increased 23 percent in the period through August. That matched the average estimate of eight analysts surveyed by Bloomberg. The maker of Jaeger-LeCoultre timepieces reiterated that first-half profit may rise 20 percent to 40 percent.

ING Groep

ING Groep NV (INGA) added 1.5 percent to 6.10 euros. Capital One Financial Corp. said ING will sell a stake of more than 9 percent that the Dutch firm acquired in the sale of its U.S. online bank this year.

ING acquired the stake, valued at about $3 billion as of yesterday, when Capital One bought ING Direct USA for $9.1 billion (COF:US) of cash and stock in February.

Roche Holding AG (ROG) gained 1.1 percent to 174.90 francs. The Basel, Switzerland-based company said it expects as many as 19 late-stage clinical trials to show results over the next year and a half.

Twelve of the trials are on new molecules, Roche said in a statement today before it briefs analysts and investors at an all-day meeting in London.

BP, the second-largest European oil producer, slid 2.8 percent to 424.6 pence. The U.S. Justice Department accused the oil company of gross negligence and “wilful misconduct” regarding the 2010 Mexican Gulf oil spill, Reuters reported, citing a court filing dated Aug. 31.

STM Falls

STMicroelectronics (STM) declined 4.5 percent to 4.42 euros after UBS advised selling the stock, saying its share price doesn’t take account of continuing challenges to the business. Exane also cut its recommendation on the shares to underperform, the equivalent of a sell rating, from neutral.

Nokia Oyj (NOK1V), the second-biggest maker of mobile phones, lost 5.1 percent to 2.17 euros.

BHP Billiton Ltd. (BHP), the world’s largest mining group, fell 0.7 percent to 1,778 pence, paring earlier losses of as much as 2.5 percent. Gauges of commodity companies and oil producers were the worst performers of the 19 industry groups on the Stoxx 600 today.

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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Companies Mentioned

  • COF
    (Capital One Financial Corp)
    • $78.49 USD
    • 0.64
    • 0.82%
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