Bloomberg News

European Stocks Are Little Changed Amid U.S. Budget Talks

December 17, 2012

European Stocks Rise 14% in 2012 for Biggest Jump in Three Years

A financial trader speaks on the telephone as he works at a brokerage in Paris. Photographer: Balint Porneczi/Bloomberg

European stocks were little changed as concern U.S. lawmakers won’t agree on a budget before the holiday offset the election in Japan of a party that backs more economic stimulus.

Royal KPN NV slumped 15 percent as the Dutch phone company partly owned by Carlos Slim’s America Movil SAB scrapped its dividend. Aggreko Plc, the world’s largest provider of mobile power supplies, slumped the most in more than 10 years after saying earnings will be “slightly lower” next year. PSA Peugeot Citroen gained 6.4 percent as Europe’s second-biggest carmaker said it is close to finalizing a deal with lenders to refinance debt at its banking unit.

The Stoxx Europe 600 Index (SXXP) retreated 0.1 percent to 279.18 at the close of trading, after earlier falling as much as 0.5 percent. The measure has still rallied 14 percent this year as the European Central Bank and the Federal Reserve expanded asset purchases.

“The market appears to be driven today by single names like KPN in the Netherlands and Aggreko (AGK) in the UK,” Soeren Steinert, who helps manage about $23 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, wrote in a message. “In the last full week of the year, the books are almost closed.”

U.S. lawmakers continue to discuss a budget deal to avoid the so-called fiscal cliff, the more than $600 billion in automatic tax increases and spending cuts due to take effect next year. The Congressional Budget Office has said a failure to prevent those changes may lead to a recession in the first half of 2013.

Japanese Election

Japan’s Liberal Democratic Party reclaimed power three years after surrendering half a century of control. The victory of Shinzo Abe’s party gives him a mandate to implement fiscal and monetary stimulus plans.

National benchmark indexes rose in 10 of the 18 western European markets. France’s CAC slipped 0.1 percent, the U.K.’s FTSE 100 lost 0.2 percent, while Germany’s DAX advanced 0.1 percent.

KPN (KPN) slumped 15 percent to 3.94 euros, its biggest decline in 11 years. The company cut its dividend as it spent 1.35 billion euros to buy frequencies for faster mobile networks.

KPN said Dec. 14 that it won’t pay a final dividend for 2012, after its 12-cent interim dividend, and that next year’s payout will be 3 cents a share. That compares with a previous plan to pay 35 cents a share for this year and at least the same amount for 2013.

HSBC Holdings Plc. cut its recommendation on the stock to underweight, a rating similar to sell, from neutral, and forecast a target price of 4 euros for KPN’s shares.

Aggreko Tumbles

Aggreko sank 22 percent to 1,664 pence, its steepest drop since June 2002. Chief Executive Officer Rupert Soames said the company is facing the same conditions as in 2008 when it suffered a “pretty sharp” drop-off in orders for four quarters.

Vodafone Group Plc (VOD) slipped 1.7 percent to 158.2 pence. Deutsche Telekom AG lost 0.3 percent to 8.52 euros. Tele2 AB retreated 1 percent to 117.40 kronor. All three companies participated in the Dutch government’s spectrum auction, with Vodafone paying 1.4 billion euros and T-Mobile paying 911 million euros, according to the government.

A gauge of telecoms companies contributed the most to the Stoxx 600’s decline.

UBS Settlement

UBS AG (UBSN) lost 0.5 percent to 14.97 Swiss francs, after earlier dropping as much as 1.5 percent. The Zurich-based bank is set to pay as much as $1.6 billion to settle claims of Libor manipulation by the U.S. Justice Department, the Commodity Futures Trading Commission, the U.K. Financial Services Authority and the Swiss Financial Market Supervisory Authority, said a person familiar with the probes.

The announcement could come by tomorrow, said the person, who asked not to be identified because they aren’t authorized to speak publicly about the matter.

PSA Peugeot Citroen (UG) gained 6.4 percent to 5.60 euros as the carmaker said it is close to finalizing a deal with a pool of banks to refinance debt at its banking unit.

Talks with lenders are “on track” and should lead to an agreement by Christmas, Carole Dupont-Pietri, head of investor relations at Peugeot, said in a telephone interview. She declined to provide details.

Centamin Plc (CEY) surged 22 percent to 42.14 pence after the gold producer said that exports from its Sukari mine in Egypt have resumed. Centamin said production will restart within the next few days.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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


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