European stocks declined, snapping the biggest three-day rally in 16 months, amid concern that holders of Greek bonds will suffer larger losses than previously agreed upon.
Man Group Plc (EMG) sank the most in almost three years as the world’s biggest hedge fund said assets under management will decrease. Cairn Energy Plc (CNE) slid 6.5 percent after abandoning an exploration well. Deutsche Boerse AG (DB1), the operator of the Frankfurt stock exchange, lost 4 percent as the European Union proposed a financial-transactions tax.
The Stoxx Europe 600 Index slipped 1.1 percent to 227.39 at the 4:30 p.m. close in London after earlier rising as much as 0.5 percent. The gauge had surged 7 percent over the previous three days, the biggest rally since May 2010, amid speculation policy makers will increase efforts to contain the region’s sovereign-debt crisis.
“We’re evaluating how much banks must take in additional provisions,” said Pierre Mouton, a fund manager at Notz Stucki & Cie. in Geneva, who helps oversee $7.5 billion. “The market would be able to forget all of this if the problem stops at Greece. What is stopping the market from rebounding is concern about Italy.”
The European Commission is resisting a push to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit, a European official said.
The commission opposes ideas that are being floated by some government officials to get banks to accept bigger so-called haircuts and doesn’t want to have talks about any such attempt, the official said on condition of anonymity because the deliberations are private.
A delegation from the EU commission, the European Central Bank and International Monetary Fund will return to Athens tomorrow as officials race to put in place a package of measures that will ring-fence Greece. The Financial Times reported late yesterday that some euro-area countries are demanding private creditors take bigger writedowns on their Greek bond holdings.
German Chancellor Angela Merkel said today that she’s waiting for a report from the EU, ECB and IMF on Greece’s budget progress before deciding whether revisions are needed to the financing package agreed in July. Euro-area leaders announced 159 billion euros ($229 billion) in new aid for Greece on July 21 and cajoled bondholders into footing part of the bill.
The Stoxx 600 fell 26 percent from this year’s peak in February through Sept. 22 amid concern the European debt crisis is spreading and the global economic recovery is faltering. The decline left the measure trading at 9 times estimated earnings, the cheapest since March 2009, data compiled by Bloomberg show.
Man Group tumbled 25 percent to 180 pence today, the biggest drop since November 2008, after saying its assets under management will decline by $6 billion amid “suppressed” demand for investment products.
“The extreme volatility of markets in recent months has created challenging performance conditions across asset classes,” Chief Executive Officer Peter Clarke said. “This has tested investor appetite for risk.”
Cairn Energy sank 6.5 percent to 276.5 pence. The company said the Delta-1 exploration well off Greenland is being plugged and abandoned after failing to find hydrocarbons.
The EU proposed a financial-transactions tax that would take effect in 2014 and raise about 57 billion euros a year. The proposal would apply a tax of 0.1 percent on trading of stocks and bonds, with a 0.01 percent rate for derivatives contracts, the European Commission said today in Brussels. Those minimum rates would apply throughout the 27-nation bloc.
PSA Peugeot Citroen, Europe’s second-largest carmaker, declined 3.2 percent to 16.37 euros as Goldman Sachs Group Inc. cut the shares to “sell” from “neutral.”
Wacker Chemie AG (WCH), the second-biggest producer of solar- grade silicon, retreated 8.2 percent to 71.68 euros. The average price of polysilicon, the raw material for solar modules, fell 4.2 percent to $46.58 a kilogram from last week because supply exceeds demand, Taipei-based EnergyTrend said today.
Germany, the world’s biggest solar-panel market, added 664 megawatts of the devices in June, a 69 percent drop from the same period last year, according to preliminary figures from the German power grid regulator.
BG Group Plc (BG/) climbed 3.4 percent to 1,262.5 pence after Goldman Sachs Group Inc. added the oil producer to its “conviction buy” list.
Smith Group Plc, the world’s largest maker of airport- security scanners, increased 2.2 percent to 969.5 pence after it said annual profit held steady, with cost-cutting programs helping offset “constrained” markets for medical equipment and detection devices.
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