European stocks retreated for a sixth day as the European Union’s energy chief said Japan’s crippled Fukushima Dai-Ichi nuclear power plant risks provoking a “major disaster,” increasing concern the crisis will worsen.
BNP Paribas SA (BNP) and HSBC Holdings Plc led banks lower as Moody’s Investors Service downgraded Portugal’s debt rating. Automakers Renault SA (RNO) and Bayerische Motoren Werke AG (BMW) lost more than 2 percent amid speculation the Japanese crisis may hurt the economic recovery. Sonova Holding AG plunged the most in eight years after the Swiss hearing-aid maker cut its forecasts.
The Stoxx Europe 600 Index sank 1.6 percent to 262.69 at the 4:30 p.m. close in London, erasing an earlier gain. The gauge has retreated almost 10 percent from this year’s high as the March 11 Japanese earthquake and subsequent explosions at the nuclear plant added to concern that revolts in the Middle East and North Africa will further disrupt oil supplies.
“The market is very confused as there are too many questions it can’t answer at the moment,” said Robert Halver, head of research at Baader Bank AG in Frankfurt. “We don’t know yet whether we will see further deterioration” in Japan.
The six-day decline in the Stoxx 600 is the longest losing streak in more than five months and has dragged the gauge to the lowest level since November. The drop has pushed the measure’s valuation to the cheapest since 2008 when compared with its companies’ reported earnings.
“It’s too early to call the bottom,” said Markus Steinbeis, head of equity portfolio management at the Unterfoehring, Germany-based unit of Pioneer Investments KGmbH, which oversees about $221 billion globally. The market’s direction “is heavily dependent on what’s happening in Japan.”
Japan’s government suspended its plan to use military helicopters to drop water on the Fukushima facility today, even as officials battled to prevent any of the four stricken reactors at the site from suffering a meltdown. Clouds of white smoke or water vapor rose from the power plant following a fire at Dai-Ichi’s No. 4 reactor this morning. Radiation prevented workers from establishing whether their efforts had extinguished the blaze.
“The site is effectively out of control,” EU Energy Commissioner Guenther Oettinger told a European Parliament committee today in Brussels. “In the coming hours, there could be further catastrophic events.”
Even so, Japan’s Nikkei 225 Stock Average (NKY) jumped 5.7 percent today as investors speculated that the selloff that drove valuations to a 28-month low was excessive.
The VStoxx Index, which measures the cost of insuring against declines in the Euro Stoxx 50 Index, gained 14 percent to 35.23, the highest level since July.
In the U.S., a report today showed wholesale costs rose more than forecast in February, led by food prices that climbed to a more than three-decade high and a surge in energy. Housing starts (NHSPSTOT) tumbled 22.5 percent to a 479,000 annual rate, according to the Commerce Department, the biggest monthly decline since March 1984.
BNP Paribas, France’s largest lender, lost 3.1 percent to 50.34 euros, leading a gauge of banks to the biggest drop among 19 industry groups in the Stoxx 600. HSBC (HSBA) slid 2.5 percent to 622.5 pence, while Banco Santander SA (SAN), the largest bank in Spain, sank 3.2 percent to 8.03 euros.
Moody’s downgraded Portugal’s debt rating by two levels, citing a weaker outlook for economic growth, risks to the government’s deficit-reduction plans and a possible need to recapitalize the country’s banks. The rating was downgraded to A3, four steps from so-called junk status.
Portugal’s borrowing costs increased at an auction today of 1 billion euros ($1.4 billion) of bills due in 2012.
A gauge of auto shares had the second-biggest decline of all industry groups, sliding to the lowest level since October. Renault, France’s second-largest carmaker, fell 4.1 percent to 36.01 euros and Germany’s BMW lost 2.2 percent to 53.09 euros.
Sonova (SOON) tumbled 23 percent to 89.15 Swiss francs for the biggest drop in the Stoxx 600. The company forecast slower sales growth and said it will make a smaller profit in 2011 than it had predicted because of the recall of a hearing implant, a delay in introducing new products and currency swings.
Bourbon SA (GBB) fell 5.2 percent to 32.06 euros as the owner of the second-biggest fleet of supply and crew ships for the oil industry reported a 75 percent drop in 2010 profit.
Pandora A/S (PNDORA) had the biggest gain in the Stoxx 600. The Danish jewelry-maker that sold shares last year rallied 8.4 percent to 258.5 kroner, rebounding from a 22 percent slump yesterday that was prompted by a sales forecast that missed most analyst estimates.
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