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European stocks fell, extending a two-week decline, as Novo Nordisk A/S sank the most in almost four years after failing to win U.S. approval for a new drug.
Novo Nordisk, the world’s largest insulin maker, tumbled 13 percent. Lundin Petroleum AB lost 10 percent after the company said resources at its Johan Sverdrup oil discovery in the North Sea may be toward the low end of forecasts. Royal Ahold NV rallied 3.8 percent after agreeing to sell its 60 percent stake in ICA, Sweden’s largest food retailer, for $3.1 billion.
The Stoxx Europe 600 Index fell 0.6 percent to 285.62 at the close of trading. The gauge has still advanced 2.1 percent this year after U.S. lawmakers agreed on a budget avoiding tax increases and spending cuts that had threatened to push the world’s largest economy into a recession.
Stocks “were off to the races at the beginning of the year and it was too much to be sustainable,” Frances Hudson, who helps manage about $248 billion as a strategist at Standard Life Investments in London, said in a Bloomberg Television interview with Francine Lacqua. “Having a nice pause to consolidate is a good thing and allows people to take a more measured approach.”
The volume of shares changing hands in Stoxx 600 companies was 29 percent lower than the 30-day average today, according to data compiled by Bloomberg, with most markets in Asia, including Japan, China and Hong Kong, closed for the Lunar New Year.
Ministers from the 17-member euro area met today to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain threaten to reignite the region’s debt crisis. Group of 20 finance chiefs and central bankers will gather in Moscow on Friday.
European companies from Barclays Plc to Total SA and Heineken NV are due to report earnings this week, Bloomberg data show. Stoxx 600 members are forecast to increase dividends by 1.8 percent in 2013, according to analysts’ estimates compiled by Bloomberg.
Companies around the world are rewarding shareholders with the highest dividends in more than two decades compared with bond interest payments. Companies in the MSCI World Index paid out an average 2.7 percent of their share price as of last week, according to data compiled by Bloomberg. That compares with the 2.6 percent yield on the Bank of America Merrill Lynch Global Corporate Index of investment-grade bonds and 6.1 percent for securities in the Barclays Global High-Yield Index.
National benchmark indexes fell in 11 of the 18 western European markets. Germany’s DAX slipped 0.2 percent, while the U.K.’s FTSE 100 climbed 0.2 percent and France’s CAC 40 added less than 0.1 percent. Denmark’s OMX Copenhagen 20 Index, which is 43 percent composed of Novo Nordisk shares, sank 6.6 percent for the biggest decline since October 2008.
“Following the very strong performance in January we believe markets may have temporarily got ahead of fundamentals,” said Philippe Bonnefoy, chief investment officer at Newscape Capital Group in London. “We are therefore marginally reducing the overall risks equity exposure across our portfolios to secure some of the strong gains and to protect investors from some of the correction that we expect lies ahead.”
Novo Nordisk, which accounts for 0.9 percent of the Stoxx 600 by weighting, lost 141.50 kroner to 928.50 kroner, the biggest drop since April 2009. The U.S. Food and Drug Administration said its Tresiba diabetes medication can’t be approved without additional data on heart safety and the Danish drugmaker won’t be able to provide the information this year, according to a statement from Novo Nordisk.
Sanofi, which competes with Novo Nordisk to dominate the diabetes market with its Lantus insulin, climbed 3.4 percent to 71.40 euros in Paris.
Lundin Petroleum fell 17 kronor to 147.90 kronor in Stockholm after saying resources in its part of the Johan Sverdrup discovery will probably be within the lower half of the forecast for 800 million to 1.8 billion barrels of oil equivalent. Det Norske Oljeselskap ASA, which owns parts of the discovery, declined 4.3 percent to 82.25 kroner.
Fugro NV dropped 7.8 percent to 38.81 euros in Amsterdam after supervisory board Vice Chairman Frans Cremers quit the biggest deepwater-oilfield surveyor. The company said in a statement that changes in financial organisation of Fugro “were not adequately carried through.”
Ahold climbed 40 cents to 11 euros after the retailer agreed to sell a stake in ICA to Hakon Invest AB for 20 billion kronor ($3.1 billion). Ahold will also pay a 1.2 billion-kronor dividend payment from ICA to Hakon.
Wacker Chemie AG increased 8.8 percent to 60.48 euros after the polysilicon maker ramped up production at a plant in Burghausen, Germany, citing growing demand from its solar-power customers. The company had put about 700 employees at the plan on shorter hours in October.
Bilfinger SE gained 2.3 percent to 75.65 euros after Germany’s second-largest construction company forecast an increase in profit in 2013, driven by savings and demands for engineering work and services in the power industry. The company reported a 2 percent gain in sales last year to 8.64 billion euros.
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