European Stocks Drop as U.S. Retail Sales Fall

European stocks fell the most in a week, snapping the longest streak of gains in three months, as U.S. retail sales and consumer confidence unexpectedly dropped.

Cap Gemini SA (CAP) declined the most in five months as Indian peer Infosys Ltd. forecast annual sales that were lower than analysts’ estimates. Croda International Plc (CRDA) slid 3.9 percent after UBS AG downgraded its recommendation on the stock. Volkswagen AG slipped the most in seven weeks after saying global-sales growth slowed in March.

The Stoxx 600 (SXXP) lost 0.9 percent to 292.39 at the close of trading, paring its weekly gain to 1.8 percent. The gauge rallied for the past four days as China’s imports increased more than estimated and U.S. jobless claims fell. The Stoxx 600 has jumped 4.5 percent so far this year.

“The March soft patch is an early warning sign of a weak Q2 to come,” Witold Bahrke, who helps oversee $55 billion as senior strategist at PFA Pension A/S in Copenhagen, said about U.S. retail sales. “On the positive side, there is a wall of money from central banks, which is getting bigger and bigger, but on the negative side, risk sentiment has to cope with a weaker U.S. macro picture and increased political and fiscal risks in the euro zone.”

Volatility in euro-area stocks, estimated by options prices, rose for the first time this week as the VStoxx Index (V2X) gained 7.3 percent.

National benchmark indexes declined in all of the 18 western European markets. The U.K.’s FTSE 100 Index slid 0.5 percent, while France’s CAC 40 Index dropped 1.2 percent and Germany’s DAX Index lost 1.6 percent.

American Economy

U.S. retail sales unexpectedly fell in March, a report showed. The 0.4 percent decrease, the biggest since June, followed a 1 percent gain in February, according to Commerce Department figures in Washington. The median forecast of 85 economists surveyed by Bloomberg called for an unchanged reading in March.

Separate data showed the Thomson Reuters/University of Michigan preliminary sentiment index for April slipped to 72.3 from 78.6 in March. Economists in a Bloomberg survey had predicted no change for this month’s reading.

In Cyprus, President Nicos Anastasiades said he will write to European Union President Herman Van Rompuy to seek “further aid.” This means he will seek an increase in the size of the rescue package above 10 billion euros ($13 billion), a government official said.

Germany said extra aid is not on the agenda for rescuing the island nation.

Separately, euro-area finance ministers met in Dublin where they reviewed support to Cyprus. Dutch Finance Minister Jeroen Dijsselbloem said the size of the program won’t change and Cyprus will be able to fill other funding gaps as it restructures its two largest banks.

Industrial Production

Figures released today showed euro-area industrial production in February expanded more than economists. Output in the 17-nation economy rose 0.4 percent from January, when it dropped a 0.6 percent, the European Union’s statistics office in Luxembourg said. That beat the 0.2 percent increase projected by economists in a Bloomberg News survey.

Cap Gemini, France’s biggest computer-services company, retreated 4.1 percent to 34.25 euros, the biggest decline since November. Software AG fell 2.6 percent to 27.51 euros.

Infosys Ltd., India’s second-largest software-services exporter, said it expects revenue to increase 6 percent to 10 percent in the year ending March 2014. Analysts estimated sales growth of 12.7 percent, based on the average of 66 predictions compiled by Bloomberg.

Croda, Rentokil

Croda, the world’s second-biggest maker of cosmetic ingredients, slid 3.9 percent to 2,608 pence. UBS downgraded the shares to sell from neutral, saying the company has failed to deliver consistent earnings growth.

Volkswagen, Europe’s biggest carmaker, fell 3.3 percent to 147.80 euros, the most since Feb. 22, after saying deliveries rose 0.2 percent last month as demand in China and North America was offset by shrinking sales across Europe.

“The data for March clearly show that the markets are becoming even more difficult,” Christian Klinger, Volkswagen’s sales chief, said in a statement.

A gauge of automotive-industry stocks was the worst performer among the 19 groups on the Stoxx 600. Porsche SE lost 1.9 percent to 56.55 euros and Continental AG dropped 3.2 percent to 87.82 euros.

Rentokil Initial Plc (RTO), the largest pest-control company, lost 2.5 percent to 97.9 pence. Goldman Sachs Group Inc. cut the shares to neutral from buy and reduced its price estimate by 14 percent to 111 pence. Goldman said it expects the company’s net debt to rise because of acquisitions and capital expenditure.

K+S AG, Europe’s biggest potash maker, fell 3.9 percent to 34.28 euros. Deutsche Bank AG downgraded the stock to sell from hold, citing continued pressure on potash prices.

Mediaset SpA tumbled 4.9 percent to 1.70 euros. The broadcaster controlled by former Italian Prime Minister Silvio Berlusconi denied reports it plans to sell Mediaset Premium, its pay-TV business.

Rio Stoppage

Rio Tinto dropped 1.9 percent to 3,080.5 pence. The second- largest mining company suspended operations at Bingham Canyon copper mine in Utah after a wall slide late on April 10. Rio said the slide occurred along a geotechnical fault line.

National Bank of Greece SA led lenders lower, declining 6.5 percent to 64.5 euro cents.

JCDecaux SA (DEC), the world’s largest outdoor advertising company, jumped 2.2 percent to 20.76 euros, the biggest gain since Jan. 17. The stock was upgraded to outperform from underperform at Exane BNP Paribas, which said it expects the company’s revenue growth to accelerate.

Telecom Italia SpA, which received approval from its board to pursue a possible merger with Hutchison Whampoa Ltd.’s Italian business, gained 3.8 percent to 63.55 euro cents. Italy’s biggest phone company said Hutchison would want control of the combined entity.

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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