European Stocks Decline After U.S. Factory-Orders Data

European stocks declined for a fourth day as reports showed that orders to U.S. factories unexpectedly fell in April and China’s services-industry growth weakened in May.

Volkswagen AG (VOW) and Daimler AG (DAI) dropped at least 1.5 percent, as carmakers led losses in the Stoxx Europe 600 Index. Aker Solutions ASA (AKSO), the Norwegian oil-services company, slumped to the lowest in four months. Vestas Wind Systems A/S plunged to a nine-year low after BlackRock Inc. cut its holding in the company to 4.02 percent.

The Stoxx 600 retreated 0.5 percent to 233.87 at the close in London. The volume of shares changing hands on the companies listed on the gauge was 55 percent lower than the average of the last 30 days, as the U.K., Irish and Greek markets were closed. The Euro Stoxx 50 has lost 20 percent from its high this year, which some analysts call a bear market.

The Stoxx 600 has tumbled 14 percent from its 2012 high amid concern Greece will be forced to leave the euro currency union. The gauge is now trading at 9.72 times its estimated earnings, lower than the five-year average of 11.67, according to data compiled by Bloomberg.

National benchmark indexes dropped in nine the 15 western European (SXXP) markets that were open today. Germany’s DAX fell 1.2 percent, while France’s CAC 40 added 0.1 percent. Spain’s IBEX 35 jumped 2.9 percent, while Italy’s FTSE MIB rose 1.2 percent.

U.S., China Reports

Orders to U.S. factories unexpectedly fell in April for a second month, pointing to a deceleration in manufacturing as the global economy cools.

Bookings dropped 0.6 percent after a revised 2.1 percent decrease in March, the first back-to-back declines in more than three years, figures from the Commerce Department showed today in Washington. Economists projected a 0.2 percent gain, according to the median forecast in a Bloomberg News survey.

China’s non-manufacturing purchasing managers’ index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing.

JPMorgan Chase & Co. last week cut its estimate for China’s growth for the second time within a month. It now expects the world’s second-largest economy to expand 7.7 percent in 2012 against a previous projection of 8 percent.

Banking Union

Spanish Prime Minister Mariano Rajoy said European leaders should reinforce efforts to protect euro-area lenders, increasing pressure on German Chancellor Angela Merkel to back new ideas to resolve the debt crisis.

Rajoy on June 2 added his voice to calls for a more robust “banking union” in Europe, lending his support for a centralized system to re-capitalize lenders. On the same day, Merkel toughened her opposition to euro-area debt sharing, telling members of her party in Berlin that “under no circumstances” would she agree to German-backed euro bonds.

French Finance Minister Pierre Moscovici will travel to Brussels today to meet with European Union Economic and Monetary Affairs Commissioner Olli Rehn and EU Financial Services Commissioner Michel Barnier. Moscovici has said that aid for troubled banks should come through the European Stability Mechanism rather than through governments.

The EU is targeting July 9 as the start date for its permanent euro-area rescue fund, the 500 billion-euro ESM, an official of the 27-nation bloc said.

Carmakers Slide

Volkswagen and Daimler dropped 3.2 percent to 119.75 euros and 1.9 percent to 34.85 euros, respectively, as a gauge of European carmakers was the worst performer of the 19 industry groups in the Stoxx 600. Continental AG (CON) lost 2.5 percent to 62.89 euros.

Aker Solutions declined 3 percent to 75.05 kroner, its lowest since Jan. 31. Subsea 7 SA (SUBC) slid 4.2 percent to 111.80 kroner and Petroleum GEO-Services ASA (PGS) lost 4.1 percent to 64.85 kroner.

Vestas, the world’s biggest wind-turbine maker, fell 5.7 percent to 32.43 kroner, its lowest since March 2003, as BlackRock cut its holding in the company by 20 percent to 4.02 percent.

Dassault Systemes SA, a maker of design software, lost 1.2 percent to 70.74 euros after CM-CIC Securities SA cut the stock to hold from buy.

Banks Rally

Spanish and Italian banks paced gains, as a gauge of European lenders posted the best performance on the Stoxx 600. UniCredit and Intesa Sanpaolo each rallied 4.5 percent to 2.61 euros and 5.8 percent to 1.06 euros, respectively. Banco Santander SA (SAN) jumped 4.9 percent to 4.53 euros.

Banco BPI SA (BPI) rallied for the fifth day, its longest stretch of gains since July 2011. The stock climbed 5.8 percent to 40.3 euro cents after the Portuguese lender said it plans to boost its capital by 1.5 billion euros, including an injection of 1.3 billion euros by the government.

Assicurazioni Generali SpA, Italy’s largest insurer, added 2.2 percent to 8.68 euros as Mario Greco prepares to take over as chief executive officer. The 52-year-old, who as CEO of Riunione Adriatica di Sicurta SpA expanded that company before its 2005 buyout by Allianz AG, will take charge at Generali after he resigns from Zurich Insurance Group AG. Perissinotto, who has led Generali since 2001, was voted out by its board 10- to-5 on June 2.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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

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