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European Stocks Retreat on U.K., Chinese Manufacturing

European (SXXP) stocks declined, following nine months of gains for the Stoxx Europe 600 Index, as measures of manufacturing in the U.K. and China dropped, while a report showed euro-area unemployment has climbed to a record.

Rio Tinto Group contributed the most to a slide by a gauge of European commodity producers. Belgacom SA (BELG) sank to the lowest price since its initial public offering in 2004 after its forecast for 2013 missed projections. Royal Vopak NV (VPK) dropped the most in more than four years after operating profit fell in 2012. Thales SA (HO) jumped the most in 13 years after posting full- year profit that beat analysts’ projections.

The Stoxx 600 retreated 0.3 percent to 289.02 at the close in London, paring an earlier slide of as much as 1.1 percent. The gauge has advanced 0.2 percent this week. The equity benchmark has risen 3.3 percent this year as U.S. lawmakers agreed on a budget avoiding automatic fiscal changes that had threatened to push the world’s biggest economy into recession.

“The market is focusing on macroeconomic data including the bad euro-zone jobless rate, bad Italian unemployment and PMI numbers,” said John Plassard, a vice president at Mirabaud Securities LLP in Geneva, which oversees about $28 billion. “The market is also focusing on the budget talks in the U.S.”

Budget Talks

President Barack Obama summoned congressional leaders to the White House today to discuss the automatic spending cuts. The president has until 11:59 p.m. in Washington to sign the order that makes the cuts take effect. The reductions will total $1.2 trillion over nine years, with $85 billion coming into force in the remaining seven months of this fiscal year.

Unemployment in the 17-nation euro area rose to 11.9 percent in January from a revised 11.8 percent in December, the European Union’s statistics office in Luxembourg said today. That was the highest since the data series started in 1995 and greater than the 11.8 percent median estimate of 33 economists in a Bloomberg News survey.

A measure of manufacturing in the U.K. unexpectedly dropped last month. The PMI compiled by Markit Economics and the Chartered Institute of Purchasing and Supply retreated to 47.9 from a revised 50.5 in January.

China’s manufacturing growth unexpectedly slowed last month. The country’s official purchasing managers’ index slipped to 50.1 in February from 50.4 in January, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. The reading compared with the 50.5 median estimate in a Bloomberg News survey of 31 economists. A number above 50 means that activity increased.

U.S. Manufacturing

European stocks pared their decline after the Institute for Supply Management’s U.S. factory index increased to 54.2 last month from 53.1 a month earlier. Economists had projected the gauge would decline to 52.5, according to the median forecast in a Bloomberg survey.

National benchmark indexes dropped in 11 of the 18 western- European markets. The U.K.’s FTSE 100 added 0.3 percent, France’s CAC 40 lost 0.6 percent, while Germany’s DAX retreated 0.4 percent.

Rio Tinto retreated 2.8 percent to 3,442 pence as a gauge of mining companies posted the largest decline of the 19 industry groups in the Stoxx 600.

Kazakhmys Plc (KAZ) slumped 4.7 percent to 590 pence. Liberum Capital Ltd. downgraded Kazakhstan’s biggest copper producer to hold from buy, citing higher unit costs at its businesses.

Glencore International Plc (GLEN) dropped 2.7 percent to 377 pence. The largest publicly traded commodities supplier said it will miss its March 15 deadline to complete the $33 billion takeover of Xstrata Plc. Glencore said that it needs approval from China before it can conclude the deal. Xstrata slid 3.1 percent to 1,127 pence.

Belgacom, Vopak

Belgacom plunged 5.6 percent to 20.21 euros after Belgium’s largest phone company forecast earnings before interest, taxes, depreciation and amortization of 1.69 billion euros ($2.2 billion) to 1.73 billion euros for 2013. The average analyst estimate had predicted Ebitda of 1.75 billion euros this year.

Vopak tumbled 11 percent to 48.90 euros, falling the most since November 2008. The world’s largest oil and chemical storage company reported an 8.5 percent drop in full-year operating profit to 536 million euros. Vopak’s chief financial officer said Ebitda will grow by less than 10 percent in 2013.

Deutsche Bank AG lost 4.3 percent to 33.57 euros. Germany’s largest bank was downgraded to sell from neutral at Goldman Sachs Group Inc. Deutsche Bank may have to transfer more than $13 billion to its U.S. unit to meet capital rules for foreign banks proposed by the Federal Reserve, according to the brokerage.

Lloyds Slides

Lloyds Banking Group Plc (LLOY) declined 2.2 percent to 53.3 pence. Britain’s biggest mortgage lender posted its third consecutive annual loss and indicated that profit margins will fall short of analyst estimates.

Thales surged 12 percent to 30.30 euros, dropping the most since February 2000. Europe’s biggest defense-electronics maker posted a 24 percent increase in earnings for 2012, helped by higher deliveries of Airbus SAS and Boeing Co. airliners, for which it supplies avionics.

Earnings before interest and taxes rose to 927 million euros from 749 million euros, the company said late yesterday. Earnings from Thales’s commercial aerospace business jumped 37 percent, while demand from military customers declined.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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

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