European stocks declined for a fifth day, the longest losing streak in a year, as a report showed growth slowed in the region’s services and manufacturing industries.
BHP Billiton Ltd. (BHP) and Rio Tinto Group paced a retreat among mining companies. Bilfinger Berger AG, Germany’s second-largest construction company, slid 3.3 percent after postponing the initial share sale of its Australian unit. BP (BP/) Plc advanced 3.5 percent after the Sunday Times said the oil company is seeking a strategic investor that would help it thwart takeover bids.
The Stoxx Europe 600 Index (SXXP) fell 0.3 percent to 236.68 after swinging between gains and losses at least 13 times today. The gauge has declined to the lowest level since May 25 as disappointing economic data from China and the U.S. fanned concern that the global recovery is faltering.
“With downward earnings revisions likely to be seen over the coming quarter, there are few catalysts to persuade investors to take on risk,” BofA Merrill Lynch Global Research’s European equity strategist Gary Baker wrote in a report today. “The risks of a double dip are present but, in our view, still low.”
Baker lowered his 2010 year-end forecast for the Stoxx 600 to 275 and reduced his 2011 per-share profit growth prediction to “sub-10 percent” from 20 percent previously.
Benchmark indexes fell in 15 of the 18 western European markets. France’s CAC 40 (CAC) slipped 0.5 percent, while Germany’s DAX and the U.K.’s FTSE 100 dropped 0.3 percent. U.S. equity markets were closed today for the Independence Day holiday.
A composite index based on a survey of euro-area purchasing managers in the services and manufacturing industries dropped to 56 in June from 56.4 the prior month, London-based Markit Economics said today. That’s in line with an initial estimate published on June 23. A reading above 50 indicates expansion.
A Chinese services industry index slid to a 15-month low in June, adding to signs that the world’s third-biggest economy is cooling. The measure fell for a third month to 55.6 from 56.4, HSBC Holdings Plc and Markit said. Today’s data adds to manufacturing indexes last week and a services gauge released July 3 in signaling that growth is slowing as the government cracks down on property speculation and the effects of stimulus measures fade.
In the U.K., confidence among chief financial officers at major companies fell for a second quarter to a 12-month low on concern the economy will return to recession amid the government’s budget squeeze, a survey by Deloitte LLP found.
Concern governments around the world are curtailing stimulus measures too soon spurred Barton Biggs to sell about half of his stock investments last week. Biggs, whose Traxis Partners LLC gained 38 percent in 2009 when he bought equities after the S&P 500 fell to a 12-year low, sold most of his U.S. technology holdings, he told Bloomberg Television July 2.
The Stoxx 600’s decline has extended the drop from this year’s high in April to 13 percent and left the gauge trading at 11 times reported earnings, the lowest valuation since 2008, according to Bloomberg data.
“Equities just look really cheap unless you assume that it’s all going to be another deep recession again,” Lothar Mentel, chief investment officer for Octopus Investments Ltd. in London, said in a Bloomberg Television interview. “Overall, the markets are overdoing things a little bit.”
BHP, Rio Tinto
BHP Billiton, the world’s largest mining company, retreated 2.2 percent to 1,684.5 pence. Rio Tinto declined 1.8 percent to 2,880.5 pence. Basic-resource stocks posted the biggest drop among all 19 industry groups in the Stoxx 600, losing 1.9 percent.
Bilfinger Berger slipped 3.3 percent to 42.90 euros after saying its Valemus Ltd. division was unable secure enough investor demand in an IPO because of “adverse conditions on the stock exchange.”
BP advanced 3.5 percent to 333.3 pence. The oil company is seeking a strategic investor that would help it thwart takeover bids, the Sunday Times reported, without saying where it got the information. The Guardian newspaper reported that the Kuwait Investment Office is in talks about increasing its stake in BP to as much as 10 percent.
Abengoa SA (ABG) and Iberdrola Renovables SA led a surge in Spanish renewable-energy stocks after the government announced a preliminary agreement with industry trade groups on subsidized electricity prices.
Abengoa soared 9.1 percent to 18.02 euros, the biggest gain this year, and Iberdrola Renovables climbed 5.1 percent to 2.74 euros. Acciona SA advanced 7.4 percent to 66.55 euros.
“We believe the immaterial impact to the company together with certainty around the funding environment and no retroactive cut, which the market had feared, are positive for Iberdrola Renovables,” Barclays Plc analyst Rupesh Madlani wrote in a report today.
Separately, U.S. President Barack Obama announced $1.85 billion in loan guarantees to Abengoa’s Abengoa Solar unit and Abound Solar Inc. to build sun-powered facilities in the U.S. that he said will create thousands of new jobs.
Abertis Infraestructuras SA (ABE) surged 12 percent to 13.56 euros before the shares of were suspended. Criteria CaixaCorp SA, which owns 28.5 percent of Abertis, and Actividades de Construccion y Servicios SA with 25.8 percent are holding talks with CVC Capital Partners Ltd. over different outcomes for Spain’s biggest highway operator, a person with knowledge of the situation said.
The Financial Times reported earlier today that Abertis’s two main shareholders are looking into a potential leveraged buyout with CVC that would value the company at 25 billion euros ($31.3 billion).
To contact the editor responsible for this story: David Merritt at firstname.lastname@example.org.