Bloomberg News

European Stocks Fall for a Fourth Day as Nestle Retreats

August 04, 2014

European equities declined for a fourth day as the region’s two largest stocks retreated, outweighing reduced concern about the region’s most indebted lenders after Portugal bailed out Banco Espirito Santo SA.

Nestle SA and Novartis AG both dropped more than 1 percent. Immofinanz AG slid 2.7 percent after the Austrian property developer reported annual profit that missed projections and said a delay in the construction of a Moscow shopping center hurt rental income. Banco Comercial Portugues SA rallied 6.1 percent. HSBC Holdings Plc gained after reporting lower provisions for bad debt in the first half.

The Stoxx Europe 600 Index lost 0.2 percent to 331.15 at the close of trading, the lowest level since April 16. It climbed as much as 0.3 percent and dropped as much as 0.4 percent in intraday trading. The benchmark fell for a second consecutive month in July, posting its first back-to-back losses in more than two years.

Global equities lost about $1.2 trillion in value last week amid concern that Argentina’s default and the crisis at Banco Espirito Santo would constrict credit markets. Portugal’s central bank has taken control of Espirito Santo in a 4.9 billion-euro ($6.6 billion) bailout that will move most of the lender’s assets to a new company called Novo Banco, according to a statement yesterday. The lender’s shares plunged 73 percent last week before they were suspended on Aug. 1.

National benchmark indexes dropped in nine of the 17 western-European markets that opened today. Iceland’s markets were closed for a holiday. The U.K.’s FTSE 100 Index slipped less than 0.1 percent, France’s CAC 40 rose 0.3 percent and Germany’s DAX declined 0.6 percent. The Swiss Market Index slid 1.3 percent for its biggest decline since April.

Nestle, Novartis

Nestle, the world’s largest food company, dropped 1.5 percent to 66.55 Swiss francs for a sixth day of losses. Drugmakers Novartis and Roche Holding AG slid 1.3 percent to 78.55 francs, and 1.4 percent to 261.10 francs respectively. The three stocks together have a weighting of 7.3 percent on the Stoxx 600.

Immofinanz slipped 2.7 percent to 2.25 euros. Net income attributable to shareholders climbed to 178.1 million euros from 111.1 million euros the previous year, according to figures posted on the developer’s website. Analysts had predicted an increase to 188.7 million euros for the year ending April 30. Rental income slipped 7.2 percent to 506.7 million euros in the 12-month period.

Hugo Stake

Hugo Boss AG dropped 1.5 percent to 104.30 euros. Permira Advisers LLP, which owns about 50 percent of the German maker of luxury suits through its Red & Black Holding GmbH vehicle, is in talks with advisers about a sale of its remaining stake, according to three people with knowledge of the matter.

Banco Comercial Portugues jumped 6.1 percent to 10.7 euro cents, following its worst week in more than two years, after the Bank of Portugal transfered Espirito Santo’s deposit-taking operations and most of its assets into a new company, which it then bailed out.

Intesa Sanpaolo SpA gained 1.4 percent to 2.29 euros, while Spain’s Bankinter SA rose 3.2 percent to 6.49 euros.

HSBC, which accounts for 16 percent of the Stoxx 600 Banks Index, advanced 0.9 percent to 635 pence. Europe’s largest lender said bad loan charges and other provisions fell to $1.8 billion in the six months ending June 30 from $3.1 billion in the year-earlier period. HSBC also said interest rates increases in the U.K. and the U.S. will boost its revenue.

Metso Upgrade

Metso Oyj (MEO1V) gained 3.2 percent to 30.94 euros. Citigroup Inc. upgraded the Finnish maker of mining equipment to neutral from sell, saying cost-cutting measures will help increase profitability, while orders at Metso’s mining unit may improve.

Balfour Beatty Plc added 1.8 percent to 244 pence following a report that WS Atkins Plc and WSP Global Inc. are bidding for the company’s U.S. consulting business. Two private-equity firms are also competing to buy Parsons Brinckerhoff, the Sunday Telegraph reported without saying where it got the information. Balfour Beatty’s merger talks with Carillion Plc collapsed last week after the construction company refused to abandon its planned sale of the New York-based business. WS Atkins lost 1.5 percent to 1,275 pence.

A report showed a worse-than-expected deterioration in euro-area investor confidence in August. The Sentix research institute’s sentiment index fell to 2.7 from 10.1 in July. Economists surveyed by Bloomberg News had predicted a reading of 9.0 before the release.

(An earlier version of this story gave the wrong size for Permira’s stake in Hugo Boss.)

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

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Will Hadfield, Trista Kelley


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