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Europe Stocks Little Changed as ZEW Offsets U.S. Report

European stocks were little changed as German investor confidence surged, offsetting an unexpected decline in U.S. sales of existing homes.

Deutsche Bank AG (DBK) lost 1.9 percent after a person familiar with the matter said Germany’s regulator asked the lender to simulate an operational split. Vivendi SA (VIV) retreated the most since August after the chief executive officer of its SFR phone unit predicted a difficult market for as long as 18 months. Banca Monte dei Paschi di Siena SpA slid 5.7 percent after a report said it used derivatives that are hurting profit.

The Stoxx Europe 600 Index (SXXP) fell less than 0.1 percent to 287.66 at the close of trading, after earlier losing as much as 0.8 percent. The gauge has still gained 2.9 percent this year as U.S. lawmakers agreed on a compromise budget and optimism rose that U.S. companies would report better-than-expected earnings.

“The existing home sales figures for December were worse than expected and they add to the mixed picture with indicators pointing in many directions,” Peter Garnry, an equity strategist at Saxo Bank A/S in Copenhagen, wrote in a message. “However, if you filter out the noise, the U.S. economy is slowly approaching trend growth again. And with an improving housing sector, regardless of today’s existing home sales, the U.S. economy could surprise to the upside in 2013, which should be positive for stocks.”

The volume of shares changing hands in Stoxx 600 companies today was 6 percent greater than the 30-day average, according to data compiled by Bloomberg.

National benchmark indexes fell in 11 of the 18 western European markets. The U.K.’s FTSE 100 was little changed, while France’s CAC 40 slipped 0.6 percent. Germany’s DAX lost 0.7 percent.

German Confidence

German investor confidence increased to the highest in 2 1/2 years in January. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 31.5 from 6.9 in December. That’s the highest since May 2010. Economists in a Bloomberg survey forecast a gain to 12.

Sales of U.S. existing homes unexpectedly dropped in December, restrained by the lowest supply of properties in more than a decade.

Purchases fell 1 percent to a 4.94 million annual rate last month, the National Association of Realtors said in a report in Washington. That’s the second-highest reading since November 2009. The median forecast of 79 economists surveyed by Bloomberg called for sales to increase to a 5.1 million rate.

In Asia, the Bank of Japan said it will shift to Federal Reserve-style open-ended asset purchases in its strongest commitment yet to ending two decades of deflation.

Deutsche Bank

Deutsche Bank slid 1.9 percent to 35.94 euros after a person familiar with the matter said the regulator, Bafin, asked Germany’s biggest lender to simulate a split of its business.

A group led by Bank of Finland Governor Erkki Liikanen called for banks to move their trading activities into separately capitalized units. Deutsche Bank has the biggest trading activities compared with its balance sheet in Germany, according to the group.

Christian Streckert, a spokesman for Deutsche Bank, declined to comment.

German newspaper Boersen Zeitung reported earlier today that Bafin asked two banks to simulate a split along the lines put forward by the Liikanen group, citing unidentified people.

Vivendi SA, Europe’s biggest media and telecommunications company, lost 4 percent to 16.08 euros. Stephane Roussel, chief executive officer of Vivendi’s SFR phone business, said the unit expects a tough market for as long as 18 months, according to an interview published in Le Parisien.

Monte Paschi

Monte Paschi (BMPS), the world’s oldest bank, fell 5.7 percent to 27.8 euro cents on concern that losses from derivatives contracts are hurting profit.

The bank’s former managers signed an agreement with Nomura Holdings Inc. (8604) three years ago that will reduce 2012 earnings by 220 million euros, Il Fatto Quotidiano reported today, citing an internal report written by Chief Executive Officer Fabrizio Viola.

Monte Paschi said Jan. 17 it will review its accounts after Bloomberg News reported the lender engaged in a transaction with Deutsche Bank at the height of the financial crisis that obscured losses before it sought a government bailout.

Rightmove Plc (RMV) gained 2.8 percent to 1,599 pence as UBS AG upgraded the British property-listings website owner to buy from neutral, saying that its competitive strengths remain intact.

Opap SA (OPAP) rallied 5.1 percent to 6.95 euros after Greek officials met to coordinate state asset-disposal plans, which include the sale of a 33 percent stake in Greece’s biggest gambling company.

Drillisch AG jumped 3.7 percent to 12.30 euros, its highest price in more than 12 years. The German telephone-services provider said it will increase its 2012 dividend to 1 euro a share from 70 cents a year earlier.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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

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