Most European stocks declined as companies from Volkswagen AG (VOW) to Credit Suisse Group AG (CSGN) reported earnings that missed analysts’ estimates and as U.S. lawmakers moved no closer to a deal to avert a default.
Volkswagen sank 4.2 percent, its largest slide in more than two months. Credit Suisse, Switzerland’s second-biggest bank, dropped 1.6 percent. Alcatel-Lucent SA plunged 15 percent on concern that spending by U.S. mobile phone companies will slow. BASF SE (BAS), the world’s largest chemical maker, retreated 4.2 percent after posting profit that missed estimates.
The Stoxx Europe 600 Index rose less than 0.1 percent to 267.08 at the 4:30 p.m. close in London as three stocks dropped for every two that gained. The index has fallen 8.3 percent from this year’s high on Feb. 17 as investors speculated that Europe’s sovereign-debt crisis will derail the economic recovery and as concern mounted that U.S. lawmakers will fail to agree on the federal government’s debt ceiling by next week’s deadline.
“What’s really weighing on the market is the problem of the U.S. debt ceiling,” said Jerome Forneris, who helps manage $11 billion at Banque Martin Maurel in Marseille. “We only have 4 1/2 days left. If the U.S. defaults, it’s bad for the whole world. They have to resolve this problem. Investors are pulling money out of stocks and buying gold. People are worried about the uncertainty and are looking for safe havens.”
National benchmark indexes fell in 13 of the western European markets. France’s CAC 40 Index slid 0.6 percent. The U.K.’s FTSE 100 Index climbed 0.3 percent, while Germany’s DAX Index (DAX) retreated 0.9 percent.
Sovereign Credit Rating
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have said they may cut the U.S.’s top-level sovereign rating if officials fail to resolve the stalemate on the $14.3 trillion borrowing ceiling before the Treasury Department’s deadline on Aug. 2.
Of the 141 Stoxx 600 companies that have reported quarterly earnings since July 11, 51 percent have missed analysts’ estimates for profit per share and 40 percent have beaten predictions.
Volkswagen AG slipped 4.2 percent to 138.05 euros as Europe’s largest carmaker said rising commodity prices and a strengthening euro will damp earnings gains this year. Volkswagen also posted second-quarter earnings before interest and taxes of 3.17 billion euros ($4.5 billion). That fell short of the 3.26 billion-euro average estimate of 14 analysts surveyed by Bloomberg.
Credit Suisse dropped 1.6 percent to 28.80 Swiss francs. The lender said it plans to cut about 2,000 jobs after second- quarter profit fell 52 percent to 768 million francs ($955 million) on lower earnings from trading. That missed the 1.06 billion-franc average estimate of analysts surveyed by Bloomberg.
Alcatel-Lucent plunged 15 percent to 2.86 euros. France’s largest telecommunications equipment supplier fell amid concern spending by U.S. mobile operators in the second half will slow. Thomas Langer, an analyst at WestLB AG in Dusseldorf, said that Alcatel Chief Executive Officer Ben Verwaayen’s remarks on the company’s U.S. prospects during a conference call were “very vague.”
Chemical makers posted the biggest loss among the 19 industry groups in the Stoxx 600, slipping 2.1 percent, as BASF and Kemira Oyj (KRA1V) retreated.
BASF, Kemira Retreat
BASF sank 4.2 percent to 63.09 euros for its biggest drop in a year. The chemical company reported second-quarter profit that fell short of analysts’ estimates, held back by a weaker U.S. dollar and shrinking margins. Ebit was little changed at 2.24 billion euros.
Kemira Oyj slumped 9.4 percent to 10.82 euros. The Finnish maker of water-treatment chemicals reported second-quarter net income of 30.7 million euros, missing the 34.3 million-euro mean estimate of six analysts surveyed by Bloomberg.
Technip SA (TEC), Europe’s second-largest oilfield-services provider, gained 2.2 percent to 75.45 euros. The company said second-quarter net income rose to 132.5 million euros from 106.1 million euros a year earlier. That beat the average analyst estimate of 108.6 million euros. The company lifted its full- year estimates.
Construction and industrial stocks decreased, led by Lafarge SA (LG), which dropped 5.1 percent to 37.68 euros. The world’s biggest cement maker said second-quarter operating profit declined to 702 million euros from 838 million euros a year earlier. Analysts surveyed by Bloomberg had estimated operating profit of 741 million euros.
Air France, Lufthansa
Air France-KLM (AF) Group slumped 8.1 percent to 8.62 euros. Deutsche Lufthansa AG (LHA) declined 2.8 percent to 14.07 euros. Europe’s biggest airlines posted earnings that missed analysts’ estimates as fuel costs soared and uprisings in north Africa clipped demand.
SBM Offshore NV (SBMO) tumbled 11 percent to 16.97 euros, its biggest slide in more than 2 1/2 years. The company said it will report a first-half net loss after booking a $450 million impairment charge.
Vallourec SA (VK) plunged 17 percent to 69.99 euros. The French producer of steel pipes for the oil and gas industry said that second-quarter profit declined from a year earlier as rising raw material costs cut the company’s margins.
Finmeccanica SpA (FNC), which produces commercial and military aircraft, tumbled 17 percent to 5.76 euros for the largest retreat in the Stoxx 600. The company lowered its 2011 revenue prediction to 17.5 billion euros to 18 billion euros. Finmeccanica had forecast sales this year of 18.3 billion euros to 19 billion euros.
Inchcape Plc (INCH) jumped 8.4 percent to 390 pence. The company beat analysts’ estimates for first-half pretax profit, posting pretax profit of 126.8 million pounds ($207 million), compared with a median estimate of 115 million pounds from six analysts, according to Bloomberg data.
Thales SA (HO) surged 6.2 percent to 29.89 euros. The French defense contractor said first-half net income soared 25 percent to 173 million euros as profit margins improved.
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