European Stocks Fall on Debt Crisis, China Concern; BHP Drops

European stocks fell as concern that France may lose its top credit rating added pressure on the region’s leaders to find a solution to the debt crisis and as China’s economy grew at the slowest pace in two years.

BHP Billiton Ltd. (BHP) and Rio Tinto Group led mining shares lower as metals declined. BNP Paribas (BNP) SA and Societe Generale (GLE) SA sank more than 3.5 percent as Moody’s Investors Service said France’s Aaa rating is under strain. Danone rose 2.2 percent as it was said to be in talks to sell water assets to Japan’s Suntory Holdings Ltd.

The benchmark Stoxx Europe 600 Index slipped 0.4 percent to 235.33 at the close of trading. The gauge retreated 1 percent yesterday as a German government spokesman said that euro-area leaders will not provide a complete fix to the debt crisis at their next meeting. The measure has still rallied 9.5 percent from this year’s low on Sept. 22.

“The crisis is not over yet,” said Martin Huefner, chief economist at Assenagon GmbH in Munich, which manages more than $4.7 billion of client assets. “We had a very strong rally in the last couple of weeks, which was exaggerated. There was no fundamental reason behind it.”

National benchmark indexes retreated in half of the 18 western European markets. The U.K.’s FTSE 100 dropped 0.5 percent and France’s CAC 40 fell 0.8 percent, while Germany’s DAX advanced 0.3 percent.

Plan Divisions

While Group of 20 finance ministers and central bankers are pressing European Union leaders to set out a strategy by the end of the week, divisions are flaring over an emerging plan to avoid a Greek default, bolster banks and curb contagion.

“As Sunday’s upcoming EU summit draws closer the hoped for consensus ‘Grand Plan’ still seems a long way off,” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, wrote in a note to investors today. “Views across the various EU stakeholders remain divided.”

German Chancellor Angela Merkel told lawmakers today that the Oct. 23 meeting will mark an important step, though not the final one, in solving the euro-area debt crisis, a participant at the meeting said.

Delegates from the 17 euro nations are moving millimeter by millimeter, the official told reporters in Berlin today on condition of anonymity because the talks were held in private. Merkel’s comments to a gathering of her Christian Democrat caucus marked the second time in two days that she has sought to damp expectations that the European crisis-fighting effort would climax at the summit in Brussels.

China Economy

China’s economy grew 9.1 percent in the third quarter from a year earlier, the slowest pace since 2009. The gain was less than the median estimate of 9.3 percent in a Bloomberg News survey of 22 economists and followed a 9.5 percent increase in the previous three months. The statistics bureau released the data in Beijing today.

“In China, I am concerned that growth could fall below 9 percent in the fourth quarter because they’re still rather restrictive in their monetary policy and inflation is still high,” Assenagon’s Huefner said.

German investor confidence fell to the lowest in almost three years in October. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, declined to minus 48.3 from minus 43.3 in September. Economists had expected a drop to minus 45, according to the median of 39 estimates in a Bloomberg News survey.

BHP, Rio Tinto

BHP Billiton, the world’s biggest mining company, lost 0.8 percent to 1,894 pence, while Rio Tinto, the second-largest, sank 4.3 percent to 3,159.5 pence. Copper declined for a second day in London amid concern demand from China may slow as the economy cools. Lead and zinc also fell.

Xstrata Plc (XTA) retreated 1.3 percent to 936.4 pence even after the largest exporter of power-station coal said total third- quarter production of the fuel rose 8.1 percent. Copper output fell 4 percent, the company said.

BNP Paribas, France’s biggest bank, declined 3.6 percent to 29.94 euros. Societe Generale sank 5 percent to 19.24 euros.

France’s Aaa credit rating is under pressure from deterioration in debt metrics and the potential for additional liabilities from Europe’s debt crisis, according to Moody’s. The nation’s financial strength has weakened because of the global economic crisis, making the nation’s debt measures the weakest among its Aaa-rated peers, the New York-based company said in a statement late yesterday that it called a markets update.

Air France, Aixtron

Air France-KLM (AF) Group slid 2.5 percent to 5.47 euros after the airline ousted Pierre-Henri Gourgeon as chief executive officer amid slumping earnings and questions regarding the role of pilots in a fatal crash.

William Hill Plc (WMH) tumbled 5.3 percent to 228.8 pence, the biggest drop in more than two years, as analysts at Deutsche Bank and Numis Securities downgraded the shares. The U.K. bookmaker said Eyal Sanoff, chief marketing officer of its William Hill Online marketing team in Tel Aviv, quit and other senior managers are subject to disciplinary action in connection with “disruption” in offices there and in Manila and Bulgaria.

Aixtron SE, a supplier to the semiconductor industry, sank 5.5 percent to 9.97 euros. The company’s third-quarter results are likely to be “disastrous,” CA Cheuvreux analyst Klaus Ringel wrote in a report.

Danone (BN), Suntory

Danone, the owner of the Evian and Volvic bottled-water brands, rose 2.2 percent to 46.40 euros as three people familiar with the matter said the company is in talks to sell water assets to Japan’s Suntory Holdings Ltd. Danone also reported third-quarter revenue that beat estimates as it sold more baby food and medical nutrition products in China and Indonesia.

Bottled-water is a “strategic” business for Danone, Chief Financial Officer Pierre-Andre Terisse said on a webcast today, declining to comment further. Suntory isn’t formally in negotiations for Danone’s water assets, said Midori Takahashi, a spokeswoman for Suntory.

Continental AG (CON) added 4.4 percent to 53.07 euros, erasing yesterday’s declines. The world’s fourth-largest tiremaker said Schaeffler Beteiligungsholding GmbH & Co.’s voting rights rose to 36.14 percent on Sept 30.

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

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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