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Europe Stocks Drop for Third Week in Four

European stocks dropped for a third week in four as the International Monetary Fund and the World Bank lowered economic-growth forecasts and companies predicted their earnings will miss estimates.

Morgan Crucible Co. and Cookson Group (CKSN) Plc tumbled at least 14 percent after saying their full-year performance will fall short of targets. Semiconductor makers retreated as America’s Advanced Micro Devices Inc. (AMD) cut its sales forecast. Marine Harvest ASA (MHG) lost 5.2 percent after warning that profit will miss analyst estimates.

The Stoxx Europe 600 Index (SXXP) declined 1.7 percent to 269.43 this week, after gaining 2.1 percent the previous week. The gauge has still climbed 15 percent from this year’s low on June 4, bolstered by bond-purchasing programs from the European Central Bank and the Federal Reserve.

“You need to see the data improve, the macro data to improve and the situation in Europe to improve before the market can move further,” Nick Nelson, a strategist at UBS AG, said on Bloomberg Television in London on Oct. 11. “You have to get the fundamentals improving now, it can’t just be liquidity.”

The IMF cut its global-growth estimate to 3.3 percent this year, the slowest since 2009, and reduced its estimate for the next year to 3.6 percent. That compares with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013.

The World Bank reduced its growth forecast for East Asia, which excludes Japan and India, to 7.2 percent this year from 8.3 percent in 2011. That is the slowest pace since 2001, according to World Bank data, and lower than a estimate in May of 7.6 percent.

U.S. Economy

Losses in Europe were limited after U.S. reports showed jobless claims fell to the lowest since February 2008 in the week ended Oct. 6, while consumer confidence unexpectedly climbed this month. The Federal Reserve also said in its anecdotal survey, known as the Beige Book, that the U.S. economy was expanding “modestly” last month.

National benchmark indexes fell in all of the 18 western European markets this week. Germany’s DAX slid 2.2 percent, the U.K.’s FTSE 100 lost 1.3 percent, France’s CAC 40 retreated 2 percent. Spain’s IBEX 35 declined 3.8 percent as Standard & Poor’s downgraded the country’s debt to one level above junk.

Morgan Crucible (MGCR), which makes carbon materials for medical and transportation equipment, tumbled 19 percent after saying trading conditions had deteriorated across most regions in the third quarter.

Cookson Forecast

Cookson Group, a British supplier of materials to the steel and glass industry, plunged 14 percent after predicting that its annual performance will be “materially” below its target. Weakening demand and trading at the engineered-ceramics division will weigh on results, the London-based company said

A gauge of European technology companies retreated 2.8 percent after AMD, the second-largest maker of processors for personal computers, said third-quarter revenue will slide about 10 percent from the prior period, more than the decline of about 1 percent it had previously projected.

Infineon Technologies AG (IFX), which last month said sales in the current quarter will drop as much as 10 percent from the three months ended September, fell 3.5 percent. ASML Holding NV declined 5 percent and ASM International NV lost 6.3 percent.

‘Challenging Conditions’

Marine Harvest retreated 5.2 percent after the world’s biggest salmon farmer said its third-quarter profit will miss analyst forecasts because of “challenging market conditions” in Chile and Canada.

Burberry Group Plc (BRBY) jumped 9.4 percent after the U.K.’s largest luxury-goods maker reported a recovery in retail sales growth since its September profit warning.

Sales at stores open at least a year rose 1 percent in the second quarter, an improvement on the unchanged performance Burberry reported on Sept. 11 for the first 10 weeks of the period. The retailer also raised its guidance for the second- half retail and wholesale operating margin. The profit measure will be in line with last year, according to Burberry, which had previously predicted a decline.

Bumi Plc (BUMI), the London-listed holding company with mining assets in Indonesia, surged 64 percent as the southeast Asian nation’s Bakrie family offered to buy back the coal assets it helped bring to the London market with Nathaniel Rothschild in a $3 billion deal two years ago.

Shareholder Losses

Investors in the 2010 initial public offering of Rothschild’s Vallar Plc, the precursor to Bumi, saw the drop in the value of their holdings reach as much as 88 percent last month after it announced an investigation into financial “irregularities” at its Indonesian investments. The probe marked the height of a dispute between Rothschild, 41, and Indonesia’s prominent Bakrie family, which founded a palm oil- to-property empire in 1942.

STMicroelectronics NV (STM) rallied 5.1 percent after people familiar with the matter said the company is evaluating a breakup that may lead to a sale of its struggling mobile-phone chip business.

Europe’s largest semiconductor maker may split its analog business, which makes chips and sensors used in products from cars to video-game consoles, from its digital assets, which focus on semiconductors used in set-top boxes, televisions and handsets, said the people, who asked not to be identified because the discussions are private.

In a statement, STMicroelectronics said it denies “the existence of initiatives which can compromise the unity of the company.”

Direct Line Insurance Group Plc climbed 6.6 percent in its first two days of trading after its initial public offering. Royal Bank of Scotland Group Plc (RBS) raised 787 million pounds ($1.3 billion) from the IPO, which has been forced by European Union regulators.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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

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