Bloomberg News

European Stocks Fall on Concern Cyprus to Reject Bank Tax

March 19, 2013

European Stocks Retreat Before Cyprus Vote on Bank-Deposit Levy

A financial trader monitors data on her computer screens near a display of the DAX Index curve at the Frankfurt Stock Exchange in Frankfurt. Photographer: Ralph Orlowski/Bloomberg

European stocks dropped for a third day as Cypriot President Nicos Anastasiades said lawmakers will probably reject a 5.8 billion-euro ($7.5 billion) bank-deposit levy needed to win a European Union-led bailout.

National Bank of Greece SA led a gauge of lenders to the lowest close this year. Rio Tinto Group (RIO) sank the most since 2011 as Goldman Sachs Group Inc. downgraded the shares. ThyssenKrupp AG fell the most in a year after a report the German steelmaker is considering raising capital. Cie. Financiere Richemont SA slid the most in almost two months as an investor sold a stake in the luxury-goods company.

The Stoxx Europe 600 Index (SXXP) slipped 0.4 percent to 295.55 at the close of trading, extending the decline from a 4 1/2-year high reached last week to 1 percent. The benchmark gauge sank as much as 1.2 percent yesterday, before rallying to close 0.2 percent lower, as euro-area policy makers pushed Cyprus into taking money from bank accounts to reduce the cost of its bailout package to 10 billion euros.

“Cyprus begins to lift the veil on how Brussels works,” Michael O’Sullivan, head of portfolio strategy at Credit Suisse Private Banking in London, told Mark Barton on Bloomberg Television. “One of the pillars of banking reform across Europe was depositor insurance, and that’s now unfortunately off the table. For other peripheral countries, there may be more bank refinancing to come.”

Cyprus Debate

Cypriot lawmakers began debating how to spread the proposed tax on bank deposits among account holders today. The levy, announced March 16, sparked outrage in the island nation and concern among investors about setting a precedent by breaking the taboo against raiding accounts.

Parliament will probably reject the proposals, Anastasiades told Sweden’s TV4 channel in an interview. Banks and stock markets in Cyprus are closed until Thursday.

National benchmark indexes declined in all of the 18 western European markets, except Ireland and Denmark. The U.K.’s FTSE 100 (UKX) dropped 0.3 percent, Germany’s DAX fell 0.8 percent and France’s CAC 40 sank 1.3 percent.

Greece’s ASE Index (ASE) plunged 3.9 percent, with National Bank of Greece sliding 15 percent to its lowest price in more than two decades, as the market opened following yesterday’s national holiday. The volume of shares changing hands in Stoxx 600 companies was 5.3 percent greater than the 30-day average, according to data compiled by Bloomberg.

Stocks fell even as German investor confidence rose to the highest level in almost three years in March. The ZEW Center for European Economic Research said its index of investor and analyst expectations gained to 48.5 from 48.2 in February. Economists in a Bloomberg survey had predicted 48.1.

Rio Tinto

Rio Tinto, the world’s second-biggest mining company, retreated 5.2 percent to 3,107 pence, the largest drop since November 2011. Goldman Sachs downgraded its rating on the stock to conviction sell from neutral, saying it estimates earnings declines for the commodity producer after cutting iron ore price forecasts for the next three years on oversupply.

Separately, Rio Tinto expects new iron ore supplies and slower growth in steel demand to weigh on prices of the raw material during the second half of the year, Greg Lilleyman, the London-based company’s president of Pilbara operations, said at a conference in Perth.

Ferrexpo Plc, a Ukrainian iron-ore producer, retreated 8.1 percent to 181.6 pence, a six-month low.

A gauge of banks in the Stoxx 600 fell 2.1 percent to the lowest close since Dec. 31. Spain’s Banco Popular Espanol SA dropped 6 percent to 64 euro cents and France’s Credit Agricole SA retreated 5.7 percent to 6.56 euros.

ThyssenKrupp Drops

ThyssenKrupp plunged 5.5 percent to 17.37 euros, the biggest retreat since March 6, 2012. Germany’s largest steelmaker is preparing to sell more than 1 billion euros of shares to increase its capital, Handelsblatt reported, citing unidentified people close to the company. ThyssenKrupp decline to comment, the newspaper said.

Richemont declined 4.3 percent to 76.10 Swiss francs, its biggest drop since Jan. 21. Goldman Sachs managed the sale of about 7 million Richemont shares for 77 francs each, according to two people familiar with the deal.

ARM Holdings Plc declined 2.6 percent to 896.5 pence after saying Chief Executive Officer Warren East will retire in July after nearly 12 years in the role. The designer of chips for Apple Inc. iPhones said Simon Segars, currently president of ARM, will take over.

Ziggo NV (ZIGGO) lost 5.2 percent to 24.50 euros in Amsterdam. The Dutch cable-television operator’s main shareholders, including Warburg Pincus LLC and Cinven Ltd., sold a 20 percent stake at 25.05 euros a share.

Telekom Austria

Telekom Austria AG (TKA), which depends on its home market for more than 63 percent of sales, fell 5.1 percent to 5.48 euros, the biggest drop since October. Austria’s telecommunications regulator said it reserved two frequency blocks for a new entrant to promote competition in its September sale of radio frequencies, the biggest in the nation’s history.

Iliad SA, the French low-cost mobile carrier, surged 5.2 percent to 157.5 euros, the highest price since its 2004 initial public offering. Annual net income was 186.5 million euros, beating all but one of the eight analyst estimates compiled by Bloomberg.

J Sainsbury Plc (SBRY), the U.K.’s third-largest supermarket chain, gained 1.7 percent to 371.4 pence, a two-year high. Sales at stores open at least a year, excluding revenue from fuel, rose 3.6 percent in the 10 weeks ended March 16, more than the 2 percent predicted by analysts in a Bloomberg survey.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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


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