European Stocks Retreat; Alfa Laval Falls as Ericsson Soars

European stocks declined, dragging the Stoxx Europe 600 Index from a six-month high, as investors speculated that additional stimulus measures by central banks will fail to sustain the pace of the economic recovery.

Alfa Laval AB, the world’s biggest maker of heat exchangers, lost 5.6 percent as sales in the third quarter missed analysts’ estimates. BioMerieux (BIM) SA slumped 4.5 percent after cutting its sales growth forecast for the second time in three months. Valeo (FR) SA, France’s second-largest auto-parts supplier, soared 11 percent after increasing its prediction for profit.

The Stoxx 600 slipped 0.3 percent to 266.75 at the 4:30 p.m. close in London, after earlier swinging between gains and losses at least 10 times. Even so, the gauge has rallied 2.7 percent this month amid speculation that slowing economic growth will prompt the U.S. Federal Reserve to announce another round of asset purchases at its November meeting to bolster growth. The measure has increased 0.4 percent this week and is within 2 percent of this year’s highest level reached in April.

“The anticipation of quantitative easing has sparked a festive mood in the financial markets,” said William de Vijlder, the chief investment officer at Fortis Investment Management in Brussels, which manages about $246 billion. “However, it should be borne in mind that quantitative easing is a sign of economic weakness that calls for exceptional measures whose effectiveness is not proven. For that reason, we remain cautious in our equity market outlook.”

National benchmark indexes fell in 13 of the 18 western European markets today. The U.K.’s FTSE 100 Index (UKX) and France’s CAC 40 Index both lost 0.3 percent. Germany’s DAX Index shed 0.1 percent.

Asset Purchases

Federal Reserve Bank of St. Louis President James Bullard proposed that the U.S. central bank buy $100 billion in long-term Treasuries next month and calibrate subsequent purchases based on the course of the economic recovery.

“If we do decide to go ahead with quantitative easing, I think there is a good program we could adopt, one I like, which is to think in units of $100 billion between meetings” of the Federal Open Market Committee, Bullard said yesterday at a conference hosted by the district bank. “We could give forward guidance for the next meeting that would suggest how likely the committee thinks we would continue these purchases.”

German Business Confidence

German business confidence unexpectedly rose in October to the highest level in more than three years, suggesting growth may not slow as much as some economists forecast. The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, rose to 107.6 from 106.8 in September. That’s the highest since May 2007. Economists had expected a drop to 106.5, according to the median of 38 forecasts in a Bloomberg News survey.

Of the 46 companies in the Stoxx 600 that have announced results since Oct. 7, 32 have beaten analyst estimates for per-share income, according to data compiled by Bloomberg. In the U.S., 113 of the 132 Standard & Poor’s 500 Index (SPX) companies that have announced results this earnings season have topped predictions, the data show.

Alfa Laval lost 5.6 percent to 118.50 kronor. Alfa’s third-quarter sales of 5.8 billion kronor ($873.7 million) missed the 5.94 billion kronor average analyst estimate.

BioMerieux Slumps

BioMerieux shed 4.5 percent to 70.48 euros, the stock’s lowest price in more than a year. The French maker of tests for HIV and hepatitis cited difficult health-care markets in western Europe and North America as it cut its full-year comparable sales forecast.

Rautaruukki Oyj (RTRKS), Finland’s largest producer of carbon steel, lost 2.5 percent to 15.38 euros after posting a third-quarter loss and lowering its full-year forecast.

Elisa Oyj (ELI1V) tumbled 6 percent to 16.33 euros, the biggest retreat in the Stoxx 600. The Finnish telecommunications company posted 363 million euros ($505 million) of net sales, missing the 368 million-euro average of analysts’ estimates.

Valeo surged 11 percent to 39.70 euros, the largest advance in the Stoxx 600. France’s second-largest auto-parts supplier raised its operating-margin forecast after reporting that third-quarter sales climbed 22 percent. Revenue increased to 2.34 billion euros from 1.91 billion euros a year earlier.

Ericsson AB (ERICB) climbed 4.2 percent to 74.90 kronor, its largest gain in six weeks, after the world’s biggest maker of mobile wireless networks reported net income of 3.68 billion kronor in the third quarter, beating the 3.52 billion kronor average analyst estimate.

Volkswagen Gains

Volkswagen AG led European carmakers to the biggest gain in the Stoxx 600. Its preferred shares climbed 3.2 percent to 96.76 euros. Europe’s largest carmaker said nine-month profit jumped more than sixfold, beating analysts’ estimates.

Net income was 4 billion euros, compared with 655 million euros a year earlier, Wolfsburg, Germany-based VW said today. Analysts predicted profit of 2.8 billion euros, the average of four estimates compiled by Bloomberg. Sales gained 20 percent to 92.5 billion euros.

Micro Focus International Plc (MCRO) rallied 7.6 percent to 411.5 pence after the Daily Mail reported that International Business Machines Corp. may be mulling a bid for the software maker for as much as 600 pence a share.

“These bid rumors highlight the attractiveness of Micro Focus’s migration business wherein it has a dominant positioning,” Execution-Noble analyst Vijay Anand wrote in a report today. He also said the shares are trading at a 35 percent discount to the European software industry on estimates that are lower than management’s guidance.

Betfair Group Ltd. (BET) surged 19 percent to 1,550 pence on its first day of trading after the British Internet gaming site raised 221 million pounds ($346.5 million) in its initial public offering.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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