Bloomberg News

European Stocks Fall as Lagarde Warning Offsets U.S. Data

October 12, 2012

European Stock Futures Decline Amid Concerns on Global Growth

A Nordea Bank AB sign is seen in the window of a bank branch in Helsinki, Finland. Futures on the Euro Stoxx 50 Index, a benchmark for the euro region, slid 0.4 percent to 2,473 at 7:05 a.m. in London. Photographer: Ville Mannikko/Bloomberg

European stocks declined for the fourth time in five days as International Monetary Fund Managing Director Christine Lagarde said global growth is not fast enough to curb unemployment, and Chinese new lending missed estimates, outweighing better-than-expected U.S. consumer confidence data.

Akzo Nobel NV (AKZA) slid 6.1 percent as Chief Executive Officer Ton Buechner extended his leave from the company. MAN SE (MAN) fell 3.3 percent after it said 2013 will be tougher than this year. Standard Chartered Plc and Axa SA (CS) climbed as Deutsche Bank AG raised its rating for the banking and insurance sectors.

The Stoxx Europe 600 Index fell 0.5 percent to 269.43 at the close of trading. The measure lost 1.7 percent this week as the International Monetary Fund cut its global growth forecasts and European Union leaders met to discuss the region’s debt crisis.

“The market is nervously trying to focus on where the growth is going to come from,” James Bevan, chief investment officer at CCLA Investment Management Ltd., said in a Bloomberg Television interview. “We know the central banks are prepared to print money. What we haven’t seen is any follow through from the fundamental real economy.”

In an interview with the British Broadcasting Corp. in Tokyo today, Lagarde said growth in advanced economies is “tepid” and that the two main areas of uncertainty are the euro region and the U.S., adding policy makers need to do more to provide more certainty.

In China, new lending missed analysts’ estimates last month as the government struggles to reverse a slowdown in the world’s second-biggest economy. Banks extended 623.2 billion yuan ($99.5 billion) of local-currency loans, the People’s Bank of China said on its website today. That compares with the median estimate of 700 billion yuan in a Bloomberg News survey of economists.

U.S. Confidence

Stocks briefly pared losses after data showed confidence among U.S. consumers unexpectedly jumped in October to the highest level since before the recession began five years ago.

The Thomson Reuters/University of Michigan preliminary October consumer sentiment index increased to 83.1 from 78.3 the prior month. The gauge was projected to fall to 78, according to the median forecast of 71 economists surveyed by Bloomberg News.

Euro-region industrial production unexpectedly increased for a second month in August. Output rose 0.6 percent from July, when it expanded a revised 0.6 percent, the European Union’s statistics office in Luxembourg said today. Economists had projected a drop of 0.4 percent, the median of 36 estimates in a Bloomberg News survey. From a year ago, output slipped 2.9 percent after a 2.8 percent decline in July.

National benchmark indexes fell in 13 of the 18 western European (SXXP) markets. The U.K.’s FTSE 100 retreated 0.6 percent, France’s CAC 40 lost 0.7 percent and Germany’s DAX declined 0.7 percent.

Akzo Nobel

Akzo Nobel, the world’s largest paintmaker, fell 6.1 percent to 42.08 euros, its biggest drop in more than a year. The company’s supervisory board will meet on Oct. 17 to discuss the health situation of Buechner, who took leave last month, citing fatigue, and was expected to return in the first half of October.

MAN fell 3.3 percent to 75 euros. The truckmaker controlled by Volkswagen AG (VOW) said next year will be tougher than 2012 as orders in the third quarter fell more than normal for the season.

Spectris Plc (SXS), a maker of production-testing gears, slid the most in more than a year, falling 6.7 percent to 1,549 pence after sector peer Morgan Crucible Co. said it will shut down plants in Europe to offset a greater-than-expected drop in revenue.

Lanxess Drops

Lanxess AG (LXS), a German chemical maker, retreated 4.4 percent to 60.21 euros. Credit Suisse Group AG downgraded the stock to underperform, similar to a sell rating, from neutral.

Saipem SpA (SPM), the Milan-based oil services contractor, declined 5.6 percent to 35.21 euros. The stock was cut to neutral from buy at Nomura Holdings Inc.

Swedbank AB (SWEDA) dropped 2.6 percent to 119.90 kronor. The stock was cut to hold from buy at Deutsche Bank.

Banks gained after Deutsche Bank upgraded European lenders and insurance companies to overweight, a recommendation similar to buy, and JPMorgan Chase & Co. (JPM:US) posted a third-quarter profit that beat analysts’ estimates.

Net income (JPM:US) at the biggest U.S. bank by assets rose 34 percent to $5.71 billion, or $1.40 a share, from $4.26 billion, or $1.02, a year earlier, the New York-based company said today in a statement. Earnings compared with an average estimate of $1.20 among 30 analysts surveyed by Bloomberg.

Standard Chartered Plc (STAN) added 2.3 percent to 1,427.5 pence while National Bank of Greece SA advanced 2.9 percent to 2.12 euros.

Axa, Europe’s second-largest insurer, climbed 0.7 percent to 11.75 euros.

STMicro Surges

STMicroelectronics NV (STM) jumped 6.4 percent to 4.67 euros. Europe’s largest semiconductor maker is evaluating a breakup that may lead to a sale of its struggling mobile-phone chip business, according to people familiar with the matter.

The company may split its analog business, which makes chips and sensors used in products from cars to video-game consoles, from its digital assets, which focus on semiconductors used in set-top boxes, televisions and handsets, said the people, who asked not to be identified because the discussions are private.

Software AG (SOW), the German infrastructure software provider, surged 12 percent, the most in a year, to 30.35 euros after it confirmed its full-year forecast and said it expects growth in license sales to continue in the fourth-quarter.

Coca-Cola Hellenic Bottling Co. (EEEK) advanced 7 percent to 16.75 euros. The stock was upgraded to overweight, meaning investors should buy the shares, from neutral at JPMorgan after it announced plans yesterday to move its main stock listing from Athens to London.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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


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