European stocks retreated, posting the biggest two-day slump in more than four months, as European Central Bank President Mario Draghi said that the economic recovery in the euro area remains subject to downside risks.
Banca Generali (BGN) SpA lost 5.1 percent after Assicurazioni Generali SpA sold part of its stake in the lender. European Aeronautic, Defence & Space Co. dropped 2.7 percent as an investor offered to sell shares worth 384 million euros ($494 million) in the owner of Airbus SAS. BTG Plc (BTG) gained 1 percent after increasing its sales forecast for 2013.
The benchmark Stoxx Europe 600 Index (SXXP) declined 1.1 percent to 291.71 at the close in London. The equity benchmark slid 0.9 percent yesterday and the Standard & Poor’s 500 Index retreated from a record high in New York as U.S. services and jobs data missed forecasts.
“The outlook for growth in Europe isn’t great, meaning earnings expectations for the second quarter are a little lower, but that’s a known risk,” Carsten Hilck, who oversees about 5 billion euros at Union Investment Privatfonds GmbH in Frankfurt, said in a phone interview. “There’s nothing new in what Draghi is saying -- just more of the same. There are always risks to economic forecasts. It’s a strange reaction in the market, I expect it to recover and bounce back up after this.”
The companies listed on the Stoxx 600 will generate earnings per share of 23.40 euros in 2013, according to analyst estimates compiled by Bloomberg. A year earlier, they predicted EPS of 27.07 euros for this calendar year.
Draghi said that risks remain to the euro area’s economic recovery in the second half of this year.
“Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks,” the ECB’s president said at a press conference in Frankfurt. The central bank left its benchmark interest rate at a record low of 0.75 percent today, matching estimates from 54 of 56 economists in a Bloomberg survey. Two had predicted a cut to 0.5 percent.
In the U.K., the Bank of England’s Monetary Policy Committee held its key rate at a record low of 0.5 percent and maintained bond purchases at 375 billion pounds ($570 billion). Today’s meeting was the first since Chancellor of the Exchequer George Osborne gave the bank more flexibility over how long it takes to meet its 2 percent inflation target. The median estimates in Bloomberg surveys of economists had predicted no change for either policy.
Banca Generali sank 5.1 percent to 13.85 euros for its longest streak of losses in more than five years. Assicurazioni Generali sold 12 percent of the Trieste, Italy-based private bank for 185 million euros. Italy’s biggest insurer holds a 51.5 percent controlling stake following the transaction.
EADS (EAD) declined 2.7 percent to 39.25 euros after a term sheet obtained by Bloomberg News showed that Stichting Administratiekantoor Spanish EADS Shares Warehousing Foundation is selling 9.6 million shares in the aerospace company. Two people familiar with the transaction said that the shares were priced at 39.75 euros apiece.
Iliad SA decreased 4.2 percent to 160.50 euros. Bank of America Corp. lowered its rating on the stock to neutral from buy, with analysts led by Emmet Kelly saying the share price already assumes “blue sky scenarios” for the low-cost mobile- phone operator.
Huhtamaki Oyj (HUH1V) fell 2 percent to 15.25 euros. The packaging company said the Finnish Cultural Foundation, a shareholder, sold as many as 2.79 million shares, reducing its stake in the business to less than 15 percent.
BTG rose 1 percent to 362.1 pence. The drugmaker forecast revenue of 230 million pounds in 2013, compared with an earlier prediction of 205 million pounds to 215 million pounds.
Portuguese banks rallied today as the nation’s PSI 20 Index rebounded from its biggest selloff in 17 months. Banco Comercial Portugues SA and Banco Espirito Santo SA, the two biggest lenders, both surged more than 4.5 percent. Portugal’s parliament rejected late yesterday a censure motion brought by the largest opposition party against Prime Minister Pedro Passos Coelho’s government.
Fresenius Medical Care AG & Co. gained 2.9 percent to 55.60 euros, its biggest advance since November. The world’s largest provider of kidney dialysis said it will buy back as much as 385 million euros of shares over the next six months.
The number of shares changing hands today in Stoxx 600- listed companies was 15 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.
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