Bloomberg News

European Stocks Halt Six-Day Gain After Reaching Five-Year High

December 30, 2013

European stocks retreated after six consecutive days of gains that sent the Stoxx Europe 600 Index to its highest level in more than five years.

Swatch Group AG, the world’s largest watchmaker, lost 0.8 percent after a fire caused damage at one of its workshops. International Personal Finance Plc (IPF) rallied 10 percent after Numis Securities Ltd. recommended buying the stock following a 26 percent drop in the past two days. Vedanta Resources Plc increased 4 percent after its Sesa Sterlite Ltd. won approval to restart its iron-ore mines in Karnataka, India.

The Stoxx 600 slipped 0.2 percent to 327.13 at the close of trading in London. The equity gauge has gained 0.6 percent this month and is heading for its biggest annual rally since 2009.

“Profits are being taken today after a phenomenal year for investors who believed in the European economic recovery and the policy backstops that were constantly put in place,” Daniel Weston, a portfolio manager at Aimed Capital GmbH in Munich, wrote in an e-mail.

The Stoxx 600 gained 5.3 percent in the six days through Dec. 27, the most since July 2012. The gauge completed a second weekly gain following better-than-forecast U.S. economic data and after the International Monetary Fund said it will raise its growth outlook for the nation. The index has advanced 17 percent this year. It reached 327.68 at the end of last week, the highest since May 2008.

Contracts to purchase previously owned U.S. homes rose less than forecast in November. A gauge of pending home sales climbed 0.2 percent, the first gain in six month, after a 1.2 percent drop in October that was larger than initially reported, the National Association of Realtors said. The median projection in a Bloomberg survey of economists called for a 1 percent advance.

CAC, DAX

National benchmark indexes fell in 13 of the 18 western-European markets today. The U.K.’s FTSE 100 Index lost 0.3 percent and Germany’s DAX retreated 0.4 percent, while France’s CAC 40 slipped less than 0.1 percent.

Swatch dropped 0.8 percent to 589.5 Swiss francs. A fire yesterday caused damage to a workshop of its ETA unit at Grenchen, in the canton of Solothurn. While nobody was harmed, the workshop was entirely destroyed, the company said yesterday, adding that it was too early to put a figure on the damage.

Marks & Spencer Group Plc retreated 1.7 percent to 442.7 pence and Delhaize Group fell 2.3 percent to 43.08 euros. A gauge of Stoxx 600 retailers fell 0.5 percent for the largest decline among 19 industry groups.

IPF Rallies

IPF jumped 10 percent to 501 pence. Numis, which placed IPF shares under review last week, upgraded them to buy, saying that risk is priced in after last week’s slump. The lender of small, unsecured cash loans said on Dec. 24 that the Polish Office of Consumer Protection and Competition fined its local unit 2.4 million pounds ($3.9 million) for infringing consumers’ interests.

Vedanta climbed 4 percent to 937.5 pence. Its subsidiary Sesa Sterlite, India’s biggest producer of aluminum, zinc and copper, received permission from a committee appointed by the nation’s top court to resume mining at its Karnataka mine.

Outotec Oyj (OTE1V) rose 2.8 percent to 7.61 euros. The Finnish maker of mining machinery and supplier of smelters won an order from OAO GMK Norilsk Nickel, Russia’s biggest mining company.

Technip SA (TEC) added 2.6 percent to 69.34 euros. Bank of America Corp. Merrill Lynch said in a report that Russia will grow further for European oil services in 2014 amid higher investments into exploration and offshore activities. The brokerage cited Europe’s largest oilfield-services provider by market value as a key name.

Petrofac Ltd. and Subsea 7 SA, which were also mentioned, climbed 1.5 percent to 1,220 pence and 1.7 percent to 116.1 kroner, respectively.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net


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