Bloomberg News

European Stocks Decline; Norsk Hydro Shares Tumble on Stake Sale

November 12, 2013

European stocks declined from a five-year high as investors weighed corporate earnings and China’s pledge to boost the role of markets in economic growth.

Norsk Hydro ASA dropped the most since 2011 after Vale SA sold a stake in the aluminum maker. Infineon Technologies AG lost 5.6 percent as Europe’s second-largest semiconductor maker predicted a decline in profitability for its first quarter. Swiss Life Holding AG rallied to a five-year high after naming a new chief executive officer.

The Stoxx Europe 600 Index fell 0.6 percent to 321.68. The gauge has rallied for five straight weeks as the European Central Bank lowered its key interest rate and the Federal Reserve maintained bond purchases. .

“It’s fair to say that for the next wave of growth, China and emerging markets as a whole will have to carry out structural reforms,” Manish Singh, who helps oversee $2 billion as head of investments at Crossbridge Capital in London, said. “In Europe, market participants are still digesting last week’s ECB news, which is starting to cause some uncertainty regarding deflationary signs, which would be a pivot point for Europe.”

National benchmark indexes fell in 16 of the 18 western European markets. France’s CAC 40 lost 0.6 percent and Germany’s DAX slid 0.3 percent. The U.K.’s FTSE 100 slipped less than 0.1 percent.

Market’s Role

China’s top policy makers affirmed that markets must play a decisive role in the allocation of economic resources, as the central committee of the Communist Party of China concluded its first plenary session under the presidency of Xi Jinping, the official Xinhua News Agency reported.

Today’s comments build on China’s pledge to reduce the role of the State in economic activity and boost private participation as the world’s second-largest economy tries to replace debt-driven growth with consumption-led expansion.

Xinhua said last week that the plenum would be a “watershed as drastic economic policies will be unveiled,” including giving more scope to market forces and an overhaul of the household registration system that limits labor mobility.

Norsk Hydro (NHY) retreated 5.5 percent to 25.49 kroner. Vale, the world’s biggest iron-ore exporter, sold its stake in the company for $1.8 billion. Vale sold 407.1 million shares for 25 kroner each. If an over-allotment option of 40.7 million shares is exercised in full, Vale will have disposed of its entire 22 percent stake for 11.2 billion kroner ($1.82 billion).

Commodity Producers

A gauge of mining companies posted the worst performance of the 19 industry groups in the Stoxx 600. Anglo American Plc slid 2.3 percent to 1,440.5 pence and Fresnillo Plc declined 3.9 percent to 915.5 pence. Polymetal International Plc slid 5.5 percent to 536.5 pence.

Infineon Technologies lost 5.6 percent to 6.88 euros, the biggest slide since June, after forecasting a slide in profitability for its first quarter because of a revenue drop at its power-management chip division. Earnings before interest and taxes will amount to 8 percent to 10 percent of sales in the three months through December, the company said.

GlaxoSmithKline Plc slipped 0.8 percent to 1,637.5 pence, for the largest drag on the Stoxx 600, after the U.K.’s biggest drugmaker said its darapladib drug for chronic coronary heart disease failed to meet its primary goal in a trial.

Pandora A/S (PNDORA), the Danish maker of charm bracelets, fell 4.5 percent to 246.50 kroner on concern that the company’s biggest shareholder may seek to further reduce its stake after today’s third-quarter earnings that beat analyst forecasts.

Private-equity fund Axcel, which owns about 26 percent, has a window of four weeks after each quarterly results statement in which it is able to sell shares, according to Pandora spokesman Jakob Risom Langelund. Pandora rallied 107 percent this year through yesterday.

New CEO

Swiss Life gained 5.1 percent to 189 Swiss francs as the country’s biggest life insurer said CEO Bruno Pfister will resign. Chief Investment Officer Patrick Frost will succeed Pfister on July 1. The company also said third-quarter premium income rose 8 percent to 3.29 billion francs ($3.57 billion).

“Frost is known to the investors’ community,” Daniel Bischof, an analyst at Helvea AG, wrote in a note to clients today. “He has built a strong track record as CIO and head of asset management at Swiss Life and should ensure a high degree of continuity, which is positive.”

TalkTalk Telecom Group Plc rallied 10 percent to 275.40 pence. The British broadband provider that split from Carphone Warehouse Group Plc raised its revenue growth target to at least 3 percent from a previous goal of 2 percent.

Osram Licht AG gained 4.7 percent to 40 euros, the highest price for the world’s second-biggest lighting company since it was spun off from Siemens AG in July. Osram increased its target for cost savings to 1.2 billion euros ($1.6 billion) and the goal for job cuts to 8,700.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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


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