European stocks dropped for a third day, to their lowest level this year, amid growing concern Greece will be forced to leave the euro area.
National Bank of Greece SA tumbled 13 percent as the country’s central bank chief said citizens had withdrawn as much as 700 million euros ($891 million) since the May 6 election. Italy’s Banca Carige SpA (CRG) fell to its lowest since at least 1995. Cie. Financiere Richemont SA rose as earnings topped estimates.
The Stoxx Europe 600 Index (SXXP) slipped 0.6 percent to 244.4 at the close of trading, having earlier advanced as much as 0.3 percent and lost 1.4 percent. The gauge has tumbled 10 percent from this year’s peak on March 16 amid continued political uncertainty in Greece, entering a so-called correction.
“I have felt for quite a long time that Greece’s exit from the euro was a matter of when, not if,” Michael Spencer, chief executive officer of ICAP Plc, said in an interview on Bloomberg Television. “I think it is better for Greece in the long run and certainly better for the euro zone.”
Greece yesterday called a new election after President Karolos Papoulias failed to broker a governing coalition in meetings yesterday with Pasok party head Evangelos Venizelos and other political leaders.
Greece’s Democratic Left leader, Fotis Kouvelis, said the sole task of a new caretaker government decided by party leaders today would be to hold elections, which would most likely be set for June 17.
German Chancellor Angela Merkel and new French President Francois Hollande said they would consider measures to spur economic growth in Greece as long as voters committed to the austerity demanded to stay in the euro.
The European Union may also “approach Greece with proposals,” Merkel said late yesterday at a joint press conference with Hollande during his first official visit to Berlin. “Greece can stay in the euro area.”
Stocks extended losses in the final half hour of trading as two euro-area officials said the European Central Bank is conducting a comprehensive review of all its policy tools and has no immediate plans to increase stimulus even as market tensions mount.
National benchmark indexes declined in 13 of western Europe’s 18 markets. The U.K.’s FTSE 100 fell 0.6 percent, Germany’s DAX dropped 0.3 percent and France’s CAC 40 increased 0.3 percent. Greece’s ASE Index fell 1.3 percent to its lowest level since February 1990.
National Bank of Greece declined 13 percent to 1.22 euros after Papoulias was told by the central bank chief, George Provopoulos, this week that financial institutions are becoming anxious about their prospects as Greeks pull out cash after the inconclusive May 6 elections.
Italy’s Banca Carige slid 11 percent to 71.5 euro cents, its lowest price since at least January 1995.
European construction companies retreated as the U.S. Architecture Billings Index, an indicator of construction activity, fell to 48.4 in April from 50.4 the previous month, the first time it dipped below 50 since October.
Eiffage dropped 8 percent to 24.20 euros, Hochtief AG (HOT) retreated 4.6 percent to 37.22 euros and Vinci SA slid 1.5 percent to 32.86 euros.
A.P. Moeller-Maersk A/S tumbled 6.2 percent to 37,840 kroner after the company said its container line, the world’s largest, will at best break even this year, falling short of analyst estimates for a profit.
Lamprell Plc (LAM) plunged 57 percent to 127 pence after the oil and gas rig engineer said it will incur a “small” loss in the first half, citing delays in equipment deliveries.
Credit Agricole climbed 2.2 percent to 3.11 euros, after tumbling 13 percent over the previous three days. Societe Generale upgraded the lender’s shares to buy from sell with a price target of 4 euros.
CA Cheuvreux also said in a note that the impact on French banks from Greece’s exit of the euro would be minimal. Societe Generale gained 1.6 percent to 16.05 euros.
Richemont climbed 8.1 percent to 57.65 francs, after the second-biggest luxury goods company reported full-year profit of 1.54 billion euros as it sold more Cartier jewelry in Asia, beating analysts’ estimates.
Swatch Group AG (UHR) gained 2.7 percent to 397.50 francs after the watchmaker forecast that the industry will expand at a “high single-digit” or “double-digit” pace in 2012 amid growing demand for luxury goods.
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