European (SXXP) stocks fell, after the region’s equities posted their largest weekly gain in three months, as China’s imports unexpectedly dropped, and Greece struggled to qualify for aid payments.
Food and beverage stocks contributed the most to the benchmark Stoxx Europe 600 Index’s retreat, as Unilever NV (UNA) and Anheuser-Busch InBev NV (ABI) each lost more than 1.5 percent. Glencore International Plc (GLEN) slipped 2.1 percent after saying that Xstrata Plc (XTA)’s Chief Executive Officer would leave six months after the conclusion of its planned takeover of the Swiss mining company. Xstrata advanced 1.2 percent.
The Stoxx 600 declined 0.2 percent to 271.69 at the close. The gauge surged the most since the beginning of June last week as European Central Bank President Mario Draghi said that policy makers approved a bond-buying plan to lower borrowing costs in the euro area.
“The latest trade data for August showed a surprise drop in imports, suggesting that domestic demand remains weak,” Michael Hewson, a market analyst at CMC Markets U.K. Plc in London, said, referring to China. “Even though inflation remains low, there remains some uncertainty as to how far the Chinese leadership will be able to go in stimulating domestic consumption.”
In China, inbound shipments declined 2.6 percent in August from a year earlier, the customs bureau said in Beijing today. That missed the median estimate of a 3.5 percent gain, according to economists surveyed by Bloomberg. Imports rose 4.7 percent in July from a year earlier.
Industrial production in the world’s second-largest economy increased the least in three years last month, according to a report from the National Bureau of Statistics yesterday. Production increased 8.9 percent, compared with 9.2 percent in July. The median estimate of economists surveyed by Bloomberg had called for a 9 percent gain.
Greece’s Prime Minister, Antonis Samaras, meets with officials from the European Commission, the ECB and the International Monetary Fund today. He failed to obtain an agreement from his coalition partners on the spending cuts required to obtain further aid from the country’s bailout.
National benchmark indexes fell in 13 of the 18 western- European markets. The U.K.’s FTSE 100 and Germany’s DAX slipped less than 0.1 percent. France’s CAC 40 lost 0.4 percent.
Germany’s highest court will issue a ruling this week on bids to halt the country’s participation in the European Stability Mechanism and the fiscal pact. The Federal Constitutional Court will decide whether to suspend the 500 billion-euro ($640 billion) permanent bailout fund on Sept. 12, nine weeks after it held a hearing on the measures.
Bank of England Governor Mervyn King said that global central bankers have agreed to start an inquiry into the London interbank offered rate, a benchmark rate at which banks lend to each other. The announcement follows a meeting at the Bank of International Settlements in Basel, Switzerland yesterday when King held discussions with his counterparts from the world’s largest economies about the future of Libor.
A gauge of food and beverage stocks lost 1.2 percent for the biggest slide of the 19 industry groups on the Stoxx 600. Unilever slid 1.7 percent to 27.41 euros, while AB InBev sank 2.8 percent to 66.18 euros. Nestle SA (NESN), the world’s largest food company, declined 0.7 percent to 58.85 Swiss francs.
Glencore retreated 2.1 percent to 370 pence, while Xstrata gained 1.2 percent to 1,026.5 pence. Glencore proposed today that Xstrata’s Chief Executive Officer, Mick Davis, leads the combined entity for six months before being replaced by its own CEO Ivan Glasenberg.
Xstrata said in a statement that it will consult with its major shareholders and respond by Sept. 24. Glencore raised the number of shares offered for the rest of the company on Sept. 7 by 9 percent and asked that Glasenberg replace Davis.
A gauge of mining shares posted the biggest gain on the Stoxx 600 as copper prices rose. Rio Tinto Group climbed 1.6 percent to 3,069 pence and Anglo American Plc (AAL) added 1.5 percent to 2,001.5 pence.
Royal Philips Electronics NV (PHIA), a maker of light bulbs, consumer electronics and health-care products, dropped 2.4 percent to 19.03 euros after Goldman Sachs Group Inc. cut its recommendation on the shares to neutral from buy. Credit Suisse Group AG also lowered its rating on Philips to neutral.
Telefonica SA (TEF) lost 0.9 percent to 11.08 euros after Goldman Sachs said the Spanish company trades at an unjustified premium to other European telecommunications operators. Goldman added the shares to its conviction sell list.
Chariot Oil & Gas Ltd. (CHAR) sank 66 percent to 33 pence, its biggest tumble since the company listed in 2008, after saying it will plug and abandon its Kabeljou exploration well off the coast of Namibia after failing to find commercial hydrocarbons.
Deutsche Lufthansa AG (LHA) climbed 2.5 percent to 10.38 euros after Unabhaengige Flugbegleiter Organisation called off further strikes to take part in mediation, Dirk Vogelsang, the union’s chief negotiator said. Lufthansa canceled more than half of its flights on Sept. 7 after a third strike by its main cabin crew.
Marks & Spencer Group Plc (MKS) added 2.7 percent to 371.1 pence. Reuters reported on Sept. 7 that bankers are evaluating debt packages to back a possible buyout of the retailer, citing unidentified lenders. The deal would involve about 4 billion pounds ($6.4 billion), divided equally between loans and bonds, Reuters said.
The volume of shares changing hands on the Stoxx 600 was 9.6 percent higher than the average of the last 30 days, data compiled by Bloomberg show.
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