European stocks declined from a five-year high as investors sold holdings in companies from Lloyds Banking Group Plc (LLOY) to Continental AG.
Lloyds dropped 3.5 percent after the U.K. government sold a 3.2 billion-pound ($5.1 billion) stake in the lender. Continental and Galp Energia SGPS SA fell at least 2.5 percent as investors sold shares in the companies. Total SA (FP) retreated 1.3 percent following a report that Groupe Bruxelles Lambert SA may dispose of its 4 percent stake in the French oil producer.
The Stoxx Europe 600 Index slipped 0.5 percent to 311.95 at the close in London after yesterday rallying to its highest level in more than five years. The volume of shares changing hands in companies listed on the equity benchmark was 16 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.
“After the big move we saw yesterday, it only makes sense that we see a pullback today and that investors see it as a good time to sell,” said Dirk Thiels, who helps oversee 65 billion euros ($87 billion) as head of investment management at KBC Asset Management NV in Brussels.
European stocks advanced yesterday as Lawrence H. Summers withdrew from the running to replace Ben S. Bernanke as Federal Reserve chairman. That removed Janet Yellen’s main competitor from the contest to take the Fed’s top job. Yellen would reduce the central bank’s monthly asset purchases at a slower rate, according to a Bloomberg Global Poll last week.
The Federal Open Market Committee will probably decide at a two-day policy meeting starting today to lower its $85 billion of monthly bond purchases by $10 billion, according to the median estimate of 34 economists in a Bloomberg News survey earlier this month. Economists forecast in a July survey that the Fed would reduce its asset purchases by $20 billion.
“People are also more uncertain regarding what the Fed might say this week,” Thiels said. “We want to see how the Fed reads the economy now.”
In Germany, a report showed that investor confidence in Europe’s largest economy increased in September to the highest level since April 2010. An index compiled by the ZEW Center for European Economic Research, which aims to predict economic developments six months in advance, rose to 49.6 from 42 in August. That exceeded the median economist projection for a reading of 45.
National benchmark indexes dropped in 14 of the 18 western-European markets today. Germany’s DAX and France’s CAC 40 fell 0.2 percent. The U.K.’s FTSE 100 declined 0.8 percent.
Lloyds retreated 3.5 percent to 74.7 pence after UK Financial Investments Ltd. sold a 6 percent stake in Britain’s largest mortgage lender. The body, which oversees the government’s holdings in banks, said it sold 4.28 billion shares at 75 pence apiece. The transaction reduced the government’s stake in Lloyds to 32.7 percent from 38.7 percent.
Continental fell 3.1 percent to 123 euros after Schaeffler AG and Schaeffler Verwaltungs GmbH sold a combined stake of 4 percent in Europe’s second-largest maker of auto parts. Schaeffler and its holding company sold 7.8 million shares at 122.50 euros a share, according to a statement.
Galp Energia dropped 2.5 percent to 12.37 euros as terms obtained by Bloomberg News showed Citigroup Inc. is offering 3.5 million shares in the Portuguese utility for 12.25 euros apiece, on behalf of an unidentified investor.
Total declined 1.3 percent to 42.38 euros, its biggest drop this month. Groupe Bruxelles Lambert said it wasn’t planning an imminent sale of its stake in Europe’s third-largest oil explorer. De Tijd reported earlier today that the holding company may sell its holding in Total. The Belgian newspaper cited analysts.
A gauge of carmakers slipped 1.4 percent from its highest level in at least 26 years after a report showed European car sales fell 4.9 percent in August. Volkswagen AG lost 1.5 percent to 180.25 euros. PSA Peugeot Citroen and Renault SA, France’s biggest automobile manufacturers, dropped 2.5 percent to 12.32 euros and 2.4 percent to 58.15 euros, respectively.
Glencore Xstrata Plc retreated 2.3 percent to 334.2 pence as UBS AG cut its rating on the stock to neutral from buy. The brokerage said that Glencore’s valuation will limit further gains by the shares until the outlook for copper and coal prices improves. The mining company trades at 18 times projected earnings, compared with 10.2 times earnings for Rio Tinto Group and 15.1 times for a gauge of European commodity producers.
Investec Plc slid 3.6 percent to 425.8 pence. The money manager with businesses in South Africa and the U.K. projected that adjusted earnings per share for the six months ending Sept. 30 will drop as much as 10 percent in pounds from a year earlier after the rand weakened against the British currency.
Royal Philips NV declined 1.9 percent to 24.43 euros after setting a target for its earnings before interest, taxes and amortization margin of 11 percent to 12 percent from 2014 to 2016. The goal fell short of Morgan Stanley’s projection for a 11 percent to 13 percent range, according to a note from analyst Ben Uglow.
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