European stocks fell, with the Stoxx Europe 600 Index posting its biggest monthly drop since August, as the number of Americans applying for unemployment insurance payments rose and U.S. business activity slowed.
ABB Ltd. (ABBN) fell 2.9 percent after the head of the company’s low-voltage subsidiary said demand from China and Italy was lackluster. Holcim Ltd. (HOLN) tracked European construction stocks lower on concern that China’s economy is slowing. Logica Plc (LOG) surged after CGI Group Inc. agreed to buy the computer-services provider for 1.7 billion pounds ($2.6 billion).
The Stoxx 600 Index declined 0.5 percent to 239.29 at the close of trade, erasing gains of as much as 0.7 percent. The measure fell 7 percent this month as concern mounted that Greece will leave the euro area and Spain’s borrowing costs climbed.
“This is headline trading in extreme, and it’ll continue as long as politicians and the European (SXXP) Central Bank are playing hardball,” said Witold Bahrke, a senior strategist at PFA Pension A/S in Copenhagen, where he helps oversee $55 billion. “People are scared and need to see someone rallying behind the European idea, finding common solutions to the debt crisis now, rather than opting for opportunistic deals latter.”
National benchmark indexes fell in all of the 18 western European markets today, except the U.K., France, Greece and Austria. Germany’s DAX dropped 0.3 percent, the Swiss Market Index fell 0.9 percent, while France’s CAC 40 rose 0.1 percent. The U.K.’s FTSE 100 added 0.2 percent
The Irish vote on the European Union’s latest treaty today, with polls indicating they will endorse measures designed to ease the euro region’s debt crisis.
Opinion polls indicate that supporters of the Fiscal Stability Treaty lead by about 18 percentage points even as doubts grow about the viability of the euro region.
European Central Bank President Mario Draghi said the ECB cannot fill the “vacuum” of the lack of fiscal prudence and governance in the euro area and called for Europe’s leaders to outline where they see the euro region in the future.
“It’s not our mandate” and “not our duty,” Draghi told a European Union Parliament committee when asked what else the ECB can do to help calm the current financial turmoil and cap widening bond spreads.
Italy’s prime minister and central bank chief today pressed Germany to back more aggressive efforts to snuff out the escalating debt crisis.
Warning that six decades of European integration are at stake, Italian Prime Minister Mario Monti called on German Chancellor Angela Merkel to take steps to halt the financial rot before a backlash builds against budget cuts. Monti and Bank of Italy Governor Ignazio Visco pushed Germany to give up its opposition to direct euro-area aid for hard-hit banks.
Companies in the U.S. added 133,000 workers in May, according to figures from Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for a 150,000 advance. Estimates of the 39 economists ranged from gains of 85,000 to 225,000.
Separately, U.S. Labor Department figures showed first-time claims for jobless benefits increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week. The initial claims exceeded the median estimate of 370,000 in a Bloomberg News survey of economists.
U.S. Business Activity
Business activity in the U.S. expanded at the slowest pace in more than two years in May as orders and production cooled.
The Institute for Supply Management-Chicago Inc. said today its barometer decreased to 52.7, the lowest since September 2009, from 56.2 in April. Readings greater than 50 signal growth. Economists projected the purchasing managers’ gauge would rise to 56.8, according to the median of 55 estimates in a Bloomberg News survey.
China’s statistics bureau and logistics federation is due to release its purchasing managers’ index for May tomorrow. The measure may fall to 52 from 53.3 a month earlier, according to the median estimate of 26 economists in a Bloomberg survey.
ABB, the biggest supplier of mobile power stations, declined 2.9 percent to 15.21 Swiss francs. The company will probably fail to reach the upper end of revenue targets for its low-voltage subsidiary on lackluster demand from China and Italy, said Tarak Mehta, the head of the unit.
Holcim fell 3.6 percent to 51.60 francs. The Stoxx 600 Construction and Materials Index posted the biggest drop of the 19 industry groups in the Stoxx 600 Index.
Admiral Group Plc (ADM), the largest car-insurer in the U.K., slumped 7.2 percent to 1,039 pence. A U.K. antitrust regulator will refer the motor insurance market to the Competition Commission after finding insurers compete in a “dysfunctional way,” pushing up premiums by 225 million pounds a year.
The Office of Fair Trading said in a statement that it has reasonable grounds to suspect parts of the private motor insurance market “prevent, restrict or distort competition.”
Logica jumped 66 percent to 1.37 euros in Amsterdam after Montreal-based CGI announced it had reached an agreement to buy the U.K. computer-services provider in a 1.7 billion pounds cash transaction, offering a premium of 59.8 percent to its closing price yesterday.
InterContinental Hotels Group Plc (IHG), the world’s largest hotel operator by rooms, advanced 6.1 percent, the most since September, to 1,526 pence, after activist investor Nelson Peltz’s Trian Fund Management LP bought a stake in the company
Snam SpA (SRG), an Italian gas-network operator, climbed 4.2 percent to 3.27 euros after Italy’s biggest oil company, Eni SpA, said it will sell a 30 percent stake to a state-owned bank for 3.5 billion euros as part of government efforts to increase competition in the energy industry.
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