Bloomberg News

Europe Stocks Little Changed as U.S. Deal Deadline Nears

December 31, 2012

European Stocks Little Changed as Deadline Nears for U.S. Deal

Visitors are seen at the Madrid Stock Exchange in Madrid. Photographer: Angel Navarrete/Bloomberg

European stocks were little changed, with the benchmark index completing the biggest annual gain since 2009, as U.S. lawmakers faced a midnight deadline to agree on a budget deal to prevent automatic deficit-reduction measures from coming into effect tomorrow.

ACEA SpA slipped 2.4 percent after saying it will sell its photovoltaic plants to RTR Rete Rinnovabile Srl. Bankia SA (BKIA) slid 3.2 percent. Viscofan SA climbed 6.8 percent for the biggest gain on the benchmark Stoxx Europe 600 Index.

The Stoxx 600 added 0.1 percent to 279.14 at 1:44 p.m. in London, following a shortened day of trading. The benchmark measure ended the year with a gain of 14 percent. The gauge fell to a low of 233.87 on June 4, and rebounded 19 percent during the rest of the year as the European Central Bank and the Federal Reserve boosted asset purchases.

“European stocks have had a very good year, even though the budget talks have dampened spirits at the end of the year. Going into 2013, European markets have two huge advantages -- cheap valuation and less stress about the debt crisis,” said Jacques Porta, a fund manager who helps oversee $627 million at Ofi Patrimoine in Paris. “The deadlock over the U.S. budget seems to continue, which is bad news for investors.”

The volume changing hands in companies on the U.K.’s FTSE 100 Index was 46 percent lower than the average of the last 30 days, according to data compiled by Bloomberg. The volume on France’s CAC 40 was 62 percent lower.

Fiscal Cliff

The U.S. Senate will convene at 11 a.m. Washington time today to discuss measures to avert more than $600 billion in automatic tax increases and spending cuts, also called the fiscal cliff.

Senate Majority Leader Harry Reid, a Democrat, said yesterday that talks were continuing and he would provide an update today. He and Republican leader Mitch McConnell were still haggling over income tax rates, estate taxes and spending cuts as Vice President Joe Biden was enlisted to help evolve a deal.

China’s manufacturing expanded at the fastest pace in 19 months, a report showed today. The final reading of a Purchasing Managers’ Index was 51.5 in December, according to a statement from HSBC Holdings Plc and Markit Economics. That compares with the 50.9 preliminary reading on Dec. 14 and a final 50.5 in November. A level above 50 indicates expansion.

2012 Performance

Greece’s ASE Index (ASE) and Germany’s DAX Index were the best- performing western European markets in 2012, as they surged 33 percent and 29 percent respectively. Spain’s IBEX 35 Index was the worst, dropping 4.7 percent. The U.K.’s FTSE 100 and France’s CAC 40 advanced 5.8 percent and 15 percent respectively.

Sky Deutschland AG, the German pay-TV operator half-owned by Rupert Murdoch’s News Corp., almost tripled this year for the best performance on the gauge. Bankia was the worst performer, plunging 89 percent.

Auto companies had the biggest gains among 19 industry groups in the Stoxx 600, (SXXP) as they rallied 36 percent this year. Telecommunications shares fell 11 percent for the biggest loss.

Nine of the 18 western European markets including Germany and Switzerland were closed today. The U.K.’s FTSE 100 lost 0.5 percent, while France’s CAC 40 gained 0.6 percent.

ACEA lost 2.4 percent to 4.55 euros after its renewable- energy unit agreed to sell Apollo Srl, which manages photovoltaic plants with a total installed capacity of 32.54 megawatts, to RTR for 102.50 million euros.

Bankia Plummets

Bankia slipped 3.2 percent to 39.1 euro cents, erasing its earlier gains. The lender has plunged 43 percent in the last three days, after Spain said Bankia has a negative value of 4.15 billion euros.

HSBC Holdings Plc (HSBA), Europe’s largest lender, dropped 0.7 percent to 646.9 pence, while Banco de Sabadell SA lost 2 percent to 1.98 euros.

SNS Reaal NV, the Dutch bank and insurer struggling to meet capital demands and repay a 2008 loan, dropped 2 percent to 1.03 euros. The company ignored Ernst & Young LLP’s advice in 2010 that it should write down as much as 1.2 billion euros on property finance loans, Dutch newspaper NRC Handelsblad reported Dec. 29 without saying where it got the information.

Viscofan, a Spanish sausage-casings maker, jumped 6.8 percent to 42.81 euros.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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


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