European Stocks Decline Amid U.S. Budget Concern

Photographer: Frantzesco Kangaris/Bloomberg

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Photographer: Frantzesco Kangaris/Bloomberg

A pedestrian passes the London Stock Exchange in London, U.K.

European stocks retreated for a second straight day as volume tumbled before the Christmas holiday and concern grew U.S. policy makers won’t meet a year- end budget deadline.

D’Ieteren SA sank 17 percent after saying its 2012 profit decline will be deeper than earlier projections. British American Tobacco Plc (BATS) dropped 1.3 percent. UBM Plc (UBM), the publisher of InformationWeek, rose 1 percent, following a gauge of media shares higher.

The Stoxx Europe 600 Index (SXXP) fell 0.1 percent to 280.6 at 1:40 p.m. London time following a shortened day of trading. The volume of transactions plunged 70 percent. The gauge has still rallied 15 percent this year as European Central Bank policy makers agreed on an unlimited asset-purchase program and the Federal Reserve announced a third round of quantitative easing.

“We are getting closer to the end of the year and, despite the common view that Republicans and Democrats should find a way through to avoid the fiscal cliff, no agreement is on the table yet,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities. “Markets are mostly closed so there is little incentive to take positions.”

Exchanges in 10 of the 18 western European nations were shut today, including Germany, Switzerland and Italy. The other markets closed early.

Low Volumes

The number of shares changing hands in the Stoxx 600 was 70 percent lower than the 30-day average, according to data compiled by Bloomberg. Volumes on the U.K.’s FTSE 100 Index retreated 45 percent.

The Stoxx 600 has risen for five straight weeks, the longest stretch of gains in four months, as investors awaited developments in U.S. talks to avoid the so-called fiscal cliff.

Time is running out for U.S. lawmakers to agree on a budget deal to avoid triggering more than $600 billion in tax increases and spending cuts in January, Senator Joseph Lieberman said. The odds are that Republicans and Democrats won’t be able to reach a deal in the lower house and Senate leaders now must take charge of resolving the stalemate, Lieberman, a retiring Connecticut independent, said on CNN’s “State of the Union” program.

In Europe, Italian Prime Minister Mario Monti said he won’t run in the country’s elections in February, though he would consider being the candidate for a coalition backing his economic agenda. Monti announced his resignation on Dec. 21, paving the way for elections on Feb. 24-25.

D’Ieteren Sinks

D’Ieteren plummeted 17 percent to 30.40 euros, the biggest drop since at least 1990. The owner of the world’s largest vehicle-glass repair company said its 2012 profit decline will be deeper than earlier projections and forecast an earnings drop of at least 10 percent next year.

D’Ieteren now sees pretax profit excluding one-time items down about 30 percent this year, compared with a Nov. 8 estimate of a 25 percent slide. KBC Groep NV (KBC) downgraded the stock to hold from buy and cut its price estimate by 26 percent to 31 euros.

British American Tobacco, Europe’s largest cigarette maker, dropped 1.3 percent to 3,101 pence, contributing the most to the Stoxx 600’s decline.

Gemalto NV (GTO), the smart-chip maker that will reach its 2013 target early thanks to mobile payments, fell 2.4 percent to 68.40 euros for the biggest slump on the Stoxx 600 today.

UBM rose 1 percent to 721 pence as a gauge of media companies posted the best performance of 19 industry groups in the Stoxx 600.

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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