Europe Stocks Decline to Two-Month Low as Output Drops

European (SXXP) stocks fell to a two-month low as industrial production dropped the most in at least three years, Greece’s recession deepened, and company results from ICAP Plc (IAP) to Mediaset SpA disappointed investors.

ICAP retreated 9.2 percent after the world’s largest broker of transactions between banks reported a slump in earnings. Mediaset declined 2.9 percent after the broadcaster cut its full-year profit forecast. Banca Monte dei Paschi di Siena SpA (BMPS) slid 5.1 percent after posting an unexpected loss.

The benchmark Stoxx Europe 600 Index fell 0.9 percent to 268.14 at the close of trading, its lowest level since Sept. 5. The gauge has lost 2.4 percent since the re-election of President Barack Obama on Nov. 6 as investors turned their attention to the U.S. fiscal cliff and Europe’s debt crisis.

“The market is still preoccupied with the same things -- Greece and the negotiations going on there, Spain keeps bubbling along in the background as to when they will ask for a bailout and the U.S. fiscal cliff,” said Andrea Williams, head of European equities at Royal London Asset Management which oversees about $1 billion. “We are also coming towards the tail end of the reporting season in Europe, you’ve had a few disasters but generally they have been there or thereabouts.”

Euro-area industrial production dropped the most in more than three years in September, led by double-digit declines in Portugal and Ireland. Output fell 2.5 percent from August, when it increased 0.9 percent, the European Union’s statistics office in Luxembourg said today. The median economist estimate was for a drop of 2 percent, a Bloomberg News survey showed.

Greek Recession

Greece’s economy contracted for a 17th straight quarter, as the country’s slump deepened amid austerity measures tied to its bailouts. Gross domestic product declined 7.2 percent in the third quarter from the same period last year after dropping 6.3 percent in the second, the Athens-based Hellenic Statistical Authority said in an e-mailed statement today.

In the U.K., jobless claims rose at the fastest pace in more than a year, increasing by 10,100 to 1.58 million in October. The median economist estimate was for no change.

Europe’s budget enforcers proposed easing the pressure on Spain to cut the deficit, backing further away from the austerity-first mantra that has dominated the response to the sovereign-debt crisis.

The European Commission said Spain doesn’t need to compound the budget-cutting pain in 2012 or 2013 and indicated the country would be eligible for a credit line to shore up its public balance sheet.

‘Effective Action’

“Spain has taken effective action,” EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels today. Asked whether Spain meets conditions for aid, he said: “Spain is on track as regards taking policies that will help restore its competitiveness and health of public finances.”

National benchmark indexes declined in 14 of the 18 western-European markets today. France’s CAC 40 slipped 0.9 percent, Germany’s DAX lost 0.9 percent, while the U.K.’s FTSE 100 fell 1.1 percent.

Profit has topped analysts’ forecasts at 52 percent of the companies on the Stoxx 600 that have reported earnings since Oct. 9, according to data compiled by Bloomberg. Revenue has beaten estimates at 53 percent of companies, down from 60 percent in the previous quarter, the data show.

ICAP tumbled 9.2 percent to 281.4 pence after the company reported a 26 percent decline in fiscal first-half pretax profit to 137 million pounds ($217 million) as the sovereign-debt crisis hurt trading. The company also said full-year profit would be at the “low end” of the 300 million-pound to 332 million-pound range forecast by analysts.

Mediaset Loss

Mediaset slid 2.9 percent to 1.24 euros after the broadcaster reported a third-quarter net loss of 88.4 million euros ($112.5 million) compared with a profit of 1.4 million euros a year earlier. Analysts in a Bloomberg survey had estimated a net loss of 79 million euros.

The company, which reported a net loss of 45.4 million euros for the first nine months, said it now expects its full- year net result “in line with that recorded in the first nine months.” In July, it repeated a forecast for profit to fall this year.

Monti Paschi fell 5.1 percent to 20.1 euro cents after Italy’s third-biggest bank unexpectedly reported a third-quarter loss of 47.4 million euros as provisions for bad loans almost doubled. The average analyst estimate was for net income of 103.4 million euros.

EDF Slides

Electricite de France SA slipped 4.8 percent to 14.50 euros, its lowest price in almost seven years, after the world’s biggest operator of nuclear reactors cut its annual target for French atomic-energy output for the second time this year and said profit may be little changed in 2013. The company also reported a 6.6 percent increase in revenue for the first nine months of the year.

J Sainsbury Plc (SBRY) fell 2.4 percent to 338.8 pence as Britain’s third-largest supermarket chain predicted the grocery market will remain “challenging” as food inflation increases in the next few months, with shoppers buying less. The retailer reported a 5.4 percent rise in first-half underlying pretax profit to 373 million pounds. That compares with the 371.3 million-pound median analyst estimate in a Bloomberg Survey.

Vivendi (VIV) SA jumped 4.7 percent to 15.69 euros after the company said earnings will fall less than expected this year, helped by cost cuts and demand for video games. The owner of record company Universal Music Group also reported that adjusted third-quarter profit declined 2.9 percent to 665 million euros, beating the average analyst estimate of 598 million euros.

Infineon Gains

Infineon Technologies AG (IFX) climbed 5.9 percent to 5.55 euros after Europe’s second-biggest semiconductor maker said it plans to reduce spending next year after fourth-quarter sales and operating profit topped analysts’ estimates.

Operating profit of 116 million euros in the three months ended Sept. 30 beat the 105 million-euro average estimate by analysts compiled by Bloomberg. Sales slipped 1 percent to 982 million euros, compared with analysts’ estimate of 974 million euros.

Enel SpA (ENEL) rose 2.2 percent to 2.82 euros after Italy’s biggest utility reported third-quarter earnings before interest, taxes, depreciation and amortization of 4.48 billion euros, exceeding the average analyst estimate of 4.08 billion euros. Chief Executive Officer Fulvio Conti said growth in Latin America and eastern Europe helped offset the ongoing downturn in the euro area.

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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