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Most European Stocks Decline as Earnings Offset U.S. Data

Most European stocks declined as earnings reports from Inditex SA to Enel (ENEL) SpA offset an increase in U.S. retail sales by the most in five months.

Inditex lost 2.6 percent after the world’s biggest clothing retailer reported the slowest profit growth in five quarters. Enel, Italy’s biggest utility, tumbled to a six-month low after posting a 79 percent slump in net income. Prudential Plc jumped to a 13-year high as the insurer raised its 2012 dividend.

The Stoxx Europe 600 Index (SXXP) slipped less than 0.1 percent to 295.32, as four shares retreated for every three that advanced. The gauge climbed to the highest level since June 2008 on March 8 as economic reports from U.S. payrolls to Chinese exports bolstered confidence in the global recovery.

“At this point, we don’t necessarily expect a substantial correction,” Daniel Morris, a market strategist at JPMorgan Chase & Co., told Caroline Hyde on Bloomberg Television in London. “Fundamental support for equities is still good. We still look for equities’ appreciation for the rest of the year.”

The Stoxx 600 pared an earlier drop of as much as 0.5 percent as U.S. retail sales topped forecasts. The 1.1 percent advance last month exceeded all projections in a Bloomberg survey and followed a revised 0.2 percent gain in January, Commerce Department figures showed today in Washington.

Euro-Area Industry

A report from the European Union’s statistics office earlier today showed industrial production in the euro area fell 0.4 percent in January, adding to signs that the region’s recession extended into the first quarter. The median economist forecast in a Bloomberg survey was for a 0.1 percent decline.

National benchmark indexes declined in 10 of the 18 markets in western Europe. France’s CAC 40 lost 0.1 percent, the U.K.’s FTSE 100 fell 0.5 percent and Germany’s DAX added less than 0.1 percent.

Italy’s FTSE MIB (FTSEMIB) slid 1.6 percent as borrowing costs rose in the first bond auction since last week’s credit-rating downgrade. The country sold 3.32 billion euros of a 2015 note at 2.48 percent. Ireland’s ISEQ Index slipped 0.2 percent as the country sells 10-year bonds for the first time since seeking financial aid in 2010.

Inditex (ITX) dropped 2.6 percent to 105.65 euros in Madrid. The retailer reported a 12 percent decline in net income to 705 million euros in the three months through January. The average of analyst forecasts in a Bloomberg survey called for 716 million euros.

Enel Earnings

Enel fell 6 percent to 2.61 euros, the lowest price since August. The utility reported 2012 net income to 865 million euros and said earnings won’t recover until 2017 as taxes and weakening power demand in its biggest markets crimp growth.

Commerzbank AG tumbled 9.7 percent to 1.26 euros, the sharpest decrease in 15 months, after Germany’s second-biggest lender announced a 2.5 billion euros ($3.3 billion) share sale to repay investments by a German government fund and Allianz SE. The lender is also asking shareholders to approve a share consolidation reducing the number of shares to 583 million from 5.83 billion.

Direct Line Insurance Group Plc slid 2.5 percent to 205 pence in London after Royal Bank of Scotland Group Plc sold a stake in the U.K.’s biggest home and motor insurer, raising 507 million pounds ($758 million). Goldman Sachs Group Inc., Morgan Stanley and UBS AG placed the 252.3 million Direct Line shares at 201 pence apiece.

RBS slipped 2 percent to 300.1 pence.

ASM Drops

ASM International NV lost 10 percent to 27.85 euros, the biggest drop since November 2008. The maker of semiconductor equipment announced plans to sell a stake of as much as 12 percent in ASM Pacific Technology Ltd. in an effort to increase the value of its combined businesses.

“People were anticipating a breakup of the company, and this is kind of a setback,” said Jos Versteeg, an analyst at Theodoor Gilissen Bankiers. “I think the company decided it still needs ASM PT as a cash cow.”

Prudential advanced 9.3 percent to 1,125 pence, its highest price since January 2000, after the biggest U.K. insurer by market value raised its 2012 dividend 16 percent to 29.19 pence a share. The company reported a 25 percent increase in operating profit to 2.53 billion pounds in 2012, beating the average analyst estimate of 2.32 billion pounds.

Royal Imtech NV increased 4.6 percent to 10.20 euros as the technical-services provider late yesterday said it reached an out-of-court settlement with Adventure World Warsaw. The shares have still lost 41 percent this year as the company had predicted writedowns exceeding 100 million euros in Poland.

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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