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Most European Stocks Retreat; Shell Slumps as TeliaSonera Soars

Most European stocks dropped as gunfire was heard on the streets of Cairo for a second night and crowds of men loyal to President Hosni Mubarak resumed clashes with protesters who want him to step down immediately.

Royal Dutch Shell Plc sank 3 percent after saying earnings from its refining division remained “under pressure” last quarter. Total SA lost 1 percent as its Yemen LNG venture said that production continued at full capacity even as protesters held a “Day of Rage” against the country’s president. TeliaSonera AB jumped 3 percent after posting fourth-quarter net income that climbed as demand increased.

The Stoxx Europe 600 Index was little changed, gaining 0.1 percent to 285 at the 4:30 p.m. close in London. More than five stocks dropped for every four stocks that increased. Most European stocks fell yesterday as companies from Electrolux AB to Scania AB announced results that disappointed investors.

“We’re in a consolidation mood,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “One problem is Egypt as investors thought tensions were going to be solved quickly, but they’re actually worsening. There’s speculation it might spread to other regions. Shell earnings were a bit of a shock for investors.”

Photographer: Hannelore Foerster/Bloomberg

Traders work in front of the DAX index curve at the Frankfurt Stock Exchange in Frankfurt. Close

Traders work in front of the DAX index curve at the Frankfurt Stock Exchange in Frankfurt.

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Photographer: Hannelore Foerster/Bloomberg

Traders work in front of the DAX index curve at the Frankfurt Stock Exchange in Frankfurt.

The European Central Bank kept interest rates at a record low as policy makers weighed the risk of faster inflation against the danger that higher borrowing costs could worsen the region’s sovereign-debt crisis. The ECB’s Governing Council set the benchmark rate at 1 percent for a 22nd month, as predicted by all 58 economists in a Bloomberg News survey.

Egypt Protests

Stocks declined as Egypt’s largest opposition group and the former United Nations nuclear chief Mohamed ElBaradei ruled out talks with President Hosni Mubarak after at least six protesters were killed in Tahrir Square overnight.

“After yesterday’s events, we refuse to negotiate with this regime,” Mohamed El-Beltagy, a senior leader of the Muslim Brotherhood, said in a phone interview in Cairo. The Muslim Brotherhood vowed to continue demonstrating until Mubarak quits the presidency.

In the U.S., a report showed the number of Americans filing first-time claims for unemployment insurance fell last week. Applications for jobless benefits decreased by 42,000 to 415,000 in the week ended Jan. 29, Labor Department figures showed today. Economists forecast claims would fall to 420,000, according to the median estimate in a Bloomberg News survey.

U.S. Services

Another report showed that service industries in the U.S. kept growing in January. The Institute for Supply Management’s non-manufacturing gauge rose to 59.4 from December’s 57.1, beating the median forecast in a Bloomberg News survey for 57.2. Readings greater than 50 mean that the index, which covers about 90 percent of the economy, expanded.

A purchasing managers index report today showed Europe’s service and manufacturing industries expanded at a faster pace than initially estimated in January, led by surging output growth in Germany and France.

A composite index based on a survey of euro-area purchasing managers in both industries rose to 59.4 from 55.5 in December, London-based Markit Economics said today. That’s greater than the initial estimate of 56.3. A reading above 50 means growth.

European stocks have climbed this year as 36 of the 65 companies in the Stoxx 600 that have reported results since Jan. 10 posted per-share earnings that topped analysts’ estimates, according to data compiled by Bloomberg.

National Benchmarks

National benchmark indexes fell in 13 out of the 18 western European markets today. Germany’s DAX Index added 0.1 percent, while the U.K.’s FTSE 100 Index slid 0.3 percent. France’s CAC 40 Index sank 0.7 percent.

Shell slumped 3 percent to 2,200 pence, its largest drop in seven months. Europe’s biggest oil company posted fourth-quarter profit, excluding one-off items and inventory changes, of $4.1 billion. That missed the $4.7 billion mean estimate of 16 analysts surveyed by Bloomberg.

Total slid 1 percent to 43.55 euros even as Yemen LNG, a liquefied natural gas venture that includes Total, said that production remained at full capacity despite a day of protests calling for President Ali Abdullah Saleh to stand down.

Actividades de Construccion y Servicios SA slumped 9.6 percent to 33.78 euros, the largest drop since 1997, after its largest shareholder sold a 5 percent stake in the Spanish construction company at a discount. Corporacion Financiera Alba sold the holding at 34 euros a share.

Kesko, Rautaruukki

Kesko Oyj sank 7.5 percent to 32.74 euros, the biggest decline in almost a year. Finland’s largest retailer reported fourth-quarter net income of 59 million euros ($80.6 million), missing the 61.4 million-euro mean estimate of eight analysts surveyed by Bloomberg.

Rautaruukki Oyj slid 4.3 percent to 17.50 euros. Finland’s largest producer of carbon steel reported a fourth-quarter net loss of 30 million euros, compared with the average estimate of a 19.4 million-euro profit from eight analysts in a Bloomberg survey.

TeliaSonera jumped 3 percent to 54.75 kronor after saying fourth-quarter net income rose to 5.31 billion kronor ($820.7 million) from 4.9 billion kronor a year earlier because of growth in the Nordic region and Spain. Analysts had predicted a profit of 5.21 billion kronor, according to a survey compiled by Bloomberg.

Deutsche Bank, Glaxo

Deutsche Bank AG climbed 1.5 percent to 45.10 euros as Germany’s biggest bank said higher revenue from fixed-income and equities trading lifted fourth-quarter earnings at its investment bank. Pretax profit at the division rose to 625 million euros from 398 million euros in the year-earlier period, according to a statement today. Revenue from sales and trading climbed 30 percent to 2.44 billion euros, helped by a rebound in asset values, the company said.

GlaxoSmithKline Plc jumped 3.6 percent to 1,168 pence after announcing that it will repurchase as much as 2 billion pounds ($3.2 billion) in stock this year, the drugmaker’s first buyback since 2008.

BT Group Plc surged 3.6 percent to 184.9 pence as the U.K.’s largest fixed-line phone company posted third-quarter adjusted operating profit of 1.48 billion pounds. Analysts had estimated profit of 1.45 billion pounds.

Konecranes Oyj soared 9.1 percent to 32.85 euros, the biggest gain in a year. The world’s biggest supplier of industrial cranes said fourth-quarter net income of 31.9 million euros beat the 26.9 million-euro mean estimate of eight analysts surveyed by Bloomberg.

Salzgitter AG rallied 1.9 percent to 60.65 euros as Germany’s second-biggest steelmaker was upgraded to “outperform” from “underperform” at Cheuvreux SA, which said “long steel is poised to halve its losses and flat steel to remain solid” and “2012 should see a more pronounced recovery.”

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

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

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