Bloomberg News

European Stocks Close Little Changed at 18-Month High

December 10, 2012

European Stocks Decline on Monti Resignation Plan, Greek Delay

Pedestrians pass the entrance to the Borsa Italiana, Italy's stock exchange, in Milan. Photographer: Alessia Pierdomenico/Bloomberg

European stocks closed little changed at an 18-month high as China’s industrial output and retail sales exceeded forecasts, offsetting concern a leadership change in Italy will disrupt efforts to reduce debt.

UniCredit SpA (UCG), Italy’s biggest bank, sank 5.2 percent, leading the benchmark FTSE MIB Index (FTSEMIB) to the biggest drop in a month, as Prime Minister Mario Monti said he will resign. Royal Imtech NV (IM) fell 4.4 percent after a report that the technical- services company presented false accounts as evidence. STMicroelectronics NV (STM) climbed 4.2 percent after saying it will leave a joint venture with Ericsson AB.

The Stoxx Europe 600 Index (SXXP) rose 0.1 percent to 279.55 at the close of trading, after earlier declining as much as 0.6 percent. The benchmark gauge has increased to the highest level since May 31, 2011, as European Central Bank President Mario Draghi unveiled a program to buy the bonds of nations who seek aid, known as Outright Monetary Transactions.

“After equities got off to a negative start due to the rising political uncertainty in Europe, we are seeing markets paring their losses,” said Witold Bahrke, a senior strategist at PFA Pension A/S in Copenhagen, where he helps oversee $55 billion. “Regardless of the negative news out of Italy, downside to European equities is limited first and foremost due to Draghi’s OMT put.”

National benchmark indexes gained in 10 of the 18 western European markets. Germany’s DAX and France’s CAC 40 added 0.2 percent, while the U.K.’s FTSE 100 (UKX) rose 0.1 percent.

Monti Plans

The FTSE MIB slid 2.2 percent as Monti said he will quit after losing support in Parliament. Silvio Berlusconi, his predecessor, announced a return to politics and criticized Monti for running a “German-centric” program. Monti will try to corral his coalition for a vote to pass the budget before handing in his resignation, President Giorgio Napolitano’s office said on Dec. 8.

Monti’s government of unelected technocrats was installed as Italy’s borrowing costs jumped to records in November 2011. His resignation announcement comes before a Dec. 13-14 summit of European Union leaders to debate a road map for the overhaul of the euro area, including increased powers to intervene in national budgets and the establishment of a banking supervisor.

In China, industrial output and retail sales exceeded forecasts last month in signs the economic recovery is accelerating. Factory production climbed 10.1 percent in November from a year earlier, the National Bureau of Statistics said yesterday, compared with the 9.8 percent median estimate of analysts surveyed by Bloomberg. Retail sales growth accelerated to 14.9 percent.

Budget Talks

U.S. President Barack Obama and House Speaker John Boehner met yesterday at the White House to discuss the budget. An agreement would help avert the so-called fiscal cliff, which could result in more than $600 billion in tax increases and spending cuts taking effect next month.

UniCredit declined 5.2 percent to 3.46 euros, the biggest drop in four months, as a gauge of banks in the Stoxx 600 slid 0.9 percent. Banca Monte dei Paschi SpA fell 5.9 percent to 19.32 euro cents and Intesa Sanpaolo SpA (ISP) tumbled 5.2 percent to 1.22 euros in Milan.

Fiat SpA (F), Italy’s largest carmaker lost 3.5 percent to 3.49 euros, snapping four days of gains. Finmeccanica SpA (FNC), the Italian defense contractor, retreated 2.2 percent to 4 euros.

Imtech, the provider of infrastructure for stadiums in this year’s London Olympics, lost 4.4 percent to 17.25 euros after gaining for eight straight days. Het Financieele Dagblad reported that a Dutch appeals court said the company presented false accounts as evidence in a bonus-payment dispute. Imtech denied that it committed forgery and said it finds the judgment “utterly incomprehensible.”

STMicro Surges

STMicroelectronics gained 4.2 percent to 5.21 euros in Milan. The European chipmaker struggling with weakening demand and competition from Asia will sell its stake in the ST-Ericsson joint venture by the third quarter of next year as part of a new strategy to make the company more profitable.

Oriflame Cosmetics SA (ORI), which sells beauty products through 3 million consultants worldwide, rose 4.2 percent to 196.50 kronor as Danske Bank A/S said it may report profit that will beat analyst estimates.

Man Group Plc (EMG) surged 5 percent to 77.3 pence. Chief Executive Officer Peter Clarke is preparing to leave the U.K. hedge-fund firm and will be replaced by Chief Operating Officer Manny Roman, said a person with knowledge of the plans.

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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