European stocks fell, completing the longest streak of weekly losses since 1998, as a drop in banking shares amid concern the region’s debt crisis will worsen overshadowed a rebound in mining shares and carmakers.
Italian lenders tumbled as Unione di Banche Italiane ScpA (UBI) fell below its rights offer price. Antofagasta Plc (ANTO) and Xstrata Plc (XTA) advanced more than 2 percent as copper rallied. Porsche SE rose 2.4 percent as BofA Merrill Lynch Global Research reiterated its “buy” recommendation.
The benchmark Stoxx Europe 600 Index slipped 0.1 percent to 263.98 at the 4:30 p.m. close in London, extending a three-month low. The measure has fallen for eighth straight weeks as U.S. economic data trailed forecasts and concern mounted that Greece will default on its debt. The decline has dragged its valuation to the cheapest since 2008 compared with reported earnings, data compiled by Bloomberg show.
“The market is still waiting for Greece’s austerity measures next week and nobody is willing to heavily invest in equities right now,” said Robert Halver, head of research at Baader Bank AG in Frankfurt. “Greece is the first nail in coffin of the euro land.”
National benchmark indexes declined in 9 of the 16 western European markets open today. Germany’s DAX Index slipped 0.4 percent while the U.K.’s FTSE 100 Index gained 0.4 percent. Sweden and Finland were closed for public holidays.
In Greece, the benchmark ASE Index slid 0.7 percent even as European Union officials vowed to stave off a default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week. Greek lawmakers are due to vote on 78 billion euros ($111 billion) of austerity measures on June 30.
The Stoxx 600 rose as much as 1.2 percent earlier as business confidence in Germany, Europe’s largest economy, unexpectedly improved. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, increased to 114.5 in June from 114.2 in May.
In the U.S., a report showed orders for durable goods climbed 1.9 percent in May after slumping 2.7 percent in April, easing concern that manufacturing will share in an extended U.S. slowdown. That beat the average economist forecast. Separate figures showed the U.S. economy grew at a 1.9 percent pace in the first quarter.
UBI sparked a selloff in Italian banks after the country’s fourth-biggest lender fell below the price at which it’s selling shares in a 1 billion-euro rights offer. The stock dropped 0.9 percent to 3.78 euros after earlier falling as much as 5 percent. UBI has been offering investors 8 new shares at 3.808 euros apiece for every 21 they hold.
UniCredit SpA (UCG), the only Italian bank facing stress tests that hasn’t announced plans to sell new shares, lost 5.5 percent to 1.36 euros. Intesa Sanpaolo SpA (ISP), Italy’s second-biggest lender by assets, fell 4.3 percent to 1.71 euros.
Moody’s Investors Service said yesterday it may downgrade 13 Italian banks because they would be vulnerable were the government’s credit rating to be cut. The ratings company last week warned that it may trim Italy’s credit ratings because of slowing economic growth and the potential for the sovereign crisis to drive the country’s borrowing costs higher.
Banking shares posted the second-worst performance among 19 industry groups in the Stoxx 600, falling 1.6 percent. BNP Paribas (BNP) SA, France’s biggest bank, slid 2.1 percent to 50.19 euros, while Deutsche Bank AG (DBK), the largest bank in Germany, fell 1.4 percent to 39.47 euros.
Allianz SE and Axa SA, Europe’s biggest insurers, fell 2.3 percent to 91.87 euros and 2.5 percent to 14.52 euros, respectively.
Antofagasta rallied 2.3 percent to 1,266 pence and Xstrata climbed 2.2 percent to 1,271 pence.
Copper rebounded today as investors resumed their bullish outlook for demand. Premier Wen Jiabao said in an opinion piece in the Financial Times that China’s efforts to stem inflation have worked and that the pace of consumer-price increases will slow. China is the world’s largest consumer of copper.
Porsche paced gains in carmakers, climbing 2.4 percent to 52.77 euros after BofA Merrill Lynch reiterated its “buy” recommendation and price estimate of 75 euros for the shares. Analysts said the company, which is looking to merge with Volkswagen AG (VOW), is a “cheap way to play” Europe’s largest carmaker.
VW rallied 2.2 percent to 134.85 euros. Bayerische Motoren Werke AG (BMW) climbed 2.9 percent to 67.13 euros, the highest since 1992, as Manager Magazin said the maker of luxury cars is aiming to increase deliveries to 2 million automobiles by 2016 and to 2.5 million to 2.6 million vehicles by 2020. The magazine cited people close to BMW.
Berkeley Group Holdings Plc (BKG) surged 11 percent to 1,254 pence, the highest price since January 2008, after the U.K.’s largest homebuilder by market value announced a plan to pay shareholders about 1.7 billion pounds ($2.7 billion) in dividends over the next 10 years. The company also reported a 21 percent jump in full-year revenue and a 19 percent increase in net income.
Cap Gemini SA (CAP), Europe’s largest computer-services company, climbed 3.8 percent to 38.75 euros after Accenture Plc (ACN), the world’s second-biggest technology-consulting company, raised its full-year revenue and earnings forecasts.
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