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European Stocks Decline as U.S. ADP Jobs Data Fuel Taper Concern

December 04, 2013

European stocks declined for a fourth day, their longest losing streak in more than five months, as better-than-expected U.S. jobs data fueled concern the Federal Reserve will pare stimulus measures sooner than forecast.

Elekta AB dropped 5.4 percent after posting quarterly profit that missed forecasts. Standard Chartered (STAN) Plc slid 6.5 percent, leading European banks lower. PSA Peugeot Citroen advanced 5.3 percent as Goldman Sachs Group Inc. added the shares to its conviction-buy list.

The Stoxx Europe 600 Index slid 0.6 percent to 317.24 at the close of trading, after earlier losing as much as 1.1 percent. The benchmark fell 1.5 percent yesterday as investors weighed valuations before U.S. jobs data this week. It has gained 13 percent this year as central banks around the world pledged to keep interest rates low for a prolonged period.

“The market is on alert for any signs of Fed tapering and these ADP numbers will raise those concerns for investors,” Stewart Richardson, who helps oversee about $100 million as chief investment officer at RMG Wealth Management LLP in London, said by phone. “When the market starts going a bit down, people worry that they’ll lose their year-to-date gains. Investors are booking profits going into the year end.”

A private jobs report by ADP Research Institute showed that U.S. companies last month added 215,000 workers in November, the most in a year. The median forecast of economists in a Bloomberg survey was for an increase of 170,000. Labor Department data on Dec. 6 may show the unemployment rate fell to 7.2 percent, matching the lowest level in five years.

The Fed has said it will monitor labor-market gains before deciding when to pare its $85 billion of monthly bond purchases. The central bank will release its Beige Book report on economic conditions in the world’s largest economy later today.

New-Home Sales

A Commerce Department release showed U.S. new-home sales jumped in October by the most in three decades. Sales increased 25.4 percent to a 444,000 annualized pace, exceeding the 429,000 rate forecast by economists surveyed by Bloomberg.

Another report showed the Institute for Supply Management’s non-manufacturing index fell to 53.9 in November from 55.4 a month earlier. Economists had projected a decline to 55.

The Federal Open Market Committee meets next on Dec. 17-18. Policy makers will probably pare the monthly pace of bond buying to $70 billion at their March 18-19 meeting, according to the median of 32 estimates in Bloomberg’s most recent survey of economists conducted on Nov. 8.

Euro-Area GDP

The euro area’s nascent recovery from a record-long recession nearly stalled in the third quarter, according to figures released today by the European Union’s statistics office in Luxembourg. Gross domestic product rose 0.1 percent after a 0.3 percent gain in the previous three months. That was in line with Eurostat’s initial estimate. From a year earlier, the economy contracted 0.4 percent.

National benchmark indexes declined in all of the western European markets except Iceland. The U.K.’s FTSE 100 fell 0.3 percent, Germany’s DAX retreated 0.9 percent and France’s CAC 40 lost 0.6 percent.

Elekta (EKTAB) dropped 5.4 percent to 91.30 kronor after the maker of radiation-surgery equipment reported second-quarter operating profit of 304 million kronor ($47 million), missing the average analyst estimate for 424 million kronor.

Standard Chartered slid 6.5 percent to 1,338.5 pence, the lowest price since August 2012. The U.K. bank that generates about three-quarters of its profits from Asia said full-year operating profit at its consumer-banking unit will decline at least 10 percent because of weakness in Korea.

Full-year revenue will probably be “broadly flat” in 2013 from a year earlier, according to a statement. “Difficult market conditions that began in August have continued in the second half and are likely to remain through to the year-end.”

Banks Fall

A gauge of banking shares posted the worst performance of the 19 industry groups in the Stoxx 600. Banca Monte dei Paschi di Siena SpA tumbled 5.3 percent to 17.4 euro cents after Il Sole reported that Fondazione Monte dei Paschi di Siena, the biggest shareholder, may sell some or all of its stake in the lender before a Dec. 27 investor meeting.

Vestas Wind Systems A/S retreated 3.4 percent to 141.10 kroner after saying its Marena Renovables project in Mexico has been further delayed. The company said in a statement that it has agreed to extend the forbearance agreement from Nov. 30 until Feb. 28, 2014. Vestas said in May the project was facing “significant” delays.

Peugeot Advances

Peugeot climbed 5.3 percent to 12.11 euros after Goldman Sachs added the shares to its conviction-buy list, citing a capital increase, asset disposals and a probable alliance in China. Goldman Sachs said in a note today that European carmakers will post profit growth through 2017 as sales and prices increase.

Sage Group Plc jumped 7.3 percent to 372.9 pence after proposing a final dividend of 7.44 pence a share, exceeding analysts’ projections of 7.1 pence. The software publisher posted sales of about 1.38 billion pounds ($2.26 billion) today, in line with analysts’ forecasts.

“We remain confident of achieving our target of 6 percent organic revenue growth in 2015, and anticipate further progress during the year ahead,” Chief Executive Officer Guy Berruyer said in a statement.

To contact the reporter on this story: Namitha Jagadeesh in London at

To contact the editor responsible for this story: Cecile Vannucci at

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