European stocks were little changed as investors assessed conflicting reports about the progress of U.S. budget negotiations aimed at avoiding automatic tax increases and spending cuts from coming into force next year.
Celesio AG (CLS1) and Metro AG (MEO) both dropped more than 2.5 percent after Franz Haniel & Cie. GmbH said it will reduce its stakes in the companies. Swiss Life Holding AG (SLHN) lost 1 percent as the life insurer took a larger-than-estimated writedown for its German brokerage. Nestle, which accounts for 3 percent of the Stoxx Europe 600 Index (SXXP), gained 1.2 percent after saying it will form a joint venture with Hutchison China Meditech Ltd.
The Stoxx 600 added 0.1 percent to 273.15 at the close of trading. The equity benchmark erased an earlier decline of as much as 0.6 percent as Republican House Speaker John Boehner said he was optimistic that Congress and President Barack Obama will reach a deal to avoid the fiscal cliff of $607 billion of automatic tax increases and spending reductions from coming into effect in January.
“It’s great that Boehner’s making reassuring comments, and investors are crossing their fingers Congress will follow through with a deal,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London. “If they can agree in principle on the broad issues and leave some of the negotiations for next year, that in itself would be a big step forward.”
Boehner told reporters in Washington that politicians will continue their discussions “sooner rather than later” to avoid the so-called fiscal cliff.
Erskine Bowles, the co-chairman of Obama’s 2010 fiscal commission said it was unlikely the president and Congress will reach an agreement by the end of this year. “I’m really worried,” Bowles told reporters in Washington. “I believe the probability is we’re going over the cliff.”
The benchmark S&P 500 (SPX) fell 0.5 percent yesterday as Senate Majority Leader Harry Reid said Democrats and Republicans have made little progress in negotiations over how to avoid the fiscal cliff at the end of the year.
Reid, speaking to reporters in Washington, said that following a Nov. 16 White House meeting, Republicans backed away from their openness to considering new tax revenue as part of the budget.
Sales of new houses in the U.S. fell 0.3 percent in October to a 368,000 annual pace, a Commerce Department report showed. Economists in a Bloomberg survey had projected sales would increase 0.3 percent to a 390,000 annual pace. They climbed 0.8 percent in September.
National benchmark indexes retreated in 11 of the 18 western-European markets. France’s CAC 40 Index gained 0.4 percent, while the U.K.’s FTSE 100 added less than 0.1 percent. Germany’s DAX advanced 0.2 percent.
Celesio retreated 2.6 percent to 12.94 euros after Haniel, sold 100 million euros ($129 million) of stock in the drug wholesaler. The closely held German investment company sold about 7.9 million shares at 12.60 euros apiece.
Metro declined 3.7 percent to 21.32 euros as Haniel said it will reduce its stake in Germany’s largest retailer to 30 percent from 34.2 percent within 18 months. Haniel also plans to raise about 150 million euros by selling non-strategic assets to help reduce net borrowing below 2 billion euros.
Swiss Life decreased 1 percent to 124 Swiss francs as Switzerland’s biggest life insurer said it wrote down the value of its AWD Holding AG unit by 576 million francs ($619 million). That exceeded the average estimate of 463 million francs, according to data compiled by Bloomberg.
The company forecast “reduced net profit in the double- digit millions” in 2012 and cut its targeted return on equity to between 8 percent and 10 percent over the next three years from between 10 percent and 12 percent. In 2011, Swiss Life posted a profit of 605 million francs. The stock jumped 15 percent last week.
Nokia Oyj (NOK1V) lost 1 percent to 2.54 euros. The mobile-phone maker’s American Depository Receipts (NOK:US) lost 5.7 percent in New York yesterday after Kantar Worldpanel ComTech reported that Apple Inc.’s iPhone more than doubled its U.S. market share to 48 percent over the 12-week period ended Oct. 28.
OAO MegaFon slipped 2 percent to $19.60 on its first day of trading in London after Russia’s second-largest mobile-phone operator raised $1.7 billion in the biggest initial offering by a Russian company in three years. MegaFon sold the stock at $20 apiece, at the bottom of an estimated range of $20 to $25.
Raiffeisen Bank International AG (RBI) retreated 5 percent to 31.51 euros after eastern Europe’s second-biggest lender reported third-quarter net income of 141 million euros. That missed the average analyst estimate of 148 million euros, according to a Bloomberg survey.
Banco Popolare SC (BP) dropped 4.1 percent to 1.09 euros after Moody’s Investors Service said it will review the ratings of Italy’s fourth-biggest bank by assets for a downgrade. The rating company cited concern about low internal capital generation. It added that asset quality may further weaken.
Nestle climbed 1.2 percent to 60.60 francs after forming a joint venture with Chi-Med to develop gastro-intestinal treatments based on traditional Chinese medicines. Nestle Health Science and Chi-Med will each own half of Nutrition Science Partners Ltd., the companies said in a statement today.
Banco Popular Espanol SA (POP) surged 9.1 percent to 62.6 euro cents. The lender said Allianz SE, Americo Amorim, Banque Federative du Credit Mutuel and Union Europea de Inversiones have exercised their rights to buy new shares in a capital increase. The shares also advanced as Spain’s central bank approved restructuring plans for the country’s rescued lenders including Bankia SA.
Bankia’s shares slumped 9.3 percent to 96.1 euro cents. The bank and three other Spanish nationalized lenders won European Commission approval for government bailouts, enabling them to recapitalize next month.
The VStoxx Index, which measures volatility on the benchmark Stoxx Europe 50 Index, slid 2.5 percent to 17.26, its lowest level since 2007.
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