BHP Billiton Ltd. (BHP) retreated to a seven-month low after the world’s largest mining company said third-quarter iron ore production rose less than expected. Volkswagen AG and Bayerische Motoren Werke AG fell at least 2.8 percent as data showed European car sales fell 10 percent in March. Tesco Plc (TSCO) lost 3.9 percent after reporting the first annual profit drop in almost 20 years and saying it will exit the U.S.
The Stoxx Europe 600 Index fell 1.5 percent to 283.73 at the close of trading, its lowest level since Dec. 31. The gauge earlier slid amid speculation Germany’s credit rating could be downgraded, before recovering some of the losses within 15 minutes. The measure has still gained 1.5 percent this year as U.S. lawmakers agreed on a compromise budget and central banks maintained stimulus measures.
“Investors are worried that Germany’s economy isn’t holding up so strongly anymore, and German downgrade rumors are spreading more fear in the markets today,” said John Plassard, who helps oversee $28 billion as vice president at Mirabaud Securities LLP in Geneva. “Coupled with the disappointing Chinese GDP numbers from earlier this week and the plunging gold prices, we’re in the middle of a phase of uncertainty and possibly a correction -- the last thing market participants want to hear in such a period are downgrade rumors.”
Some 14,000 DAX Index futures contracts expiring in June changed hands in a five-minute period about 9:50 a.m. in Frankfurt today, more than 15 times the 20-day average volume for that time of day, according to data compiled by Bloomberg. The index’s volatility was caused by external events, Deutsche Boerse, the exchange’s operator, said in a statement.
National benchmark indexes declined in 16 of the 18 western European markets. The U.K.’s FTSE 100 Index slipped 1 percent, Germany’s DAX Index slid 2.3 percent and France’s CAC 40 lost 2.4 percent.
“In the shorter term, we have seen a bit of nervousness linked to the poor figures out of China and the selloff in commodities -- and we’re seeing mining stocks also weighing today,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities.
The volume of shares changing hands in Stoxx 600 companies was 6.1 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
U.K. unemployment rose at its fastest pace in more than a year and wage increases slowed. Unemployment as measured by International Labour Organisation methods rose by 70,000 to 2.56 million in the three months through February, the most since November 2011, the Office for National Statistics said today in London. The median forecast of 27 economists in a Bloomberg News survey was for the rate to stay unchanged.
A separate release showed that Bank of England Governor Mervyn King was defeated for a third month in a push for more stimulus. Six of the Monetary Policy Committee voted to keep the target for quantitative easing at 375 billion pounds ($575 billion) this month, the central bank said in the minutes of the April 3-4 meeting, published in London today. King, David Miles and Paul Fisher wanted to increase it by 25 billion pounds.
The Federal Reserve releases its Beige Book report at 2 p.m. New York time, which includes a summary and analysis of economic conditions in 12 U.S. districts. Fed Chairman Ben S. Bernanke said April 8 that the economy is “significantly stronger” than it was four years ago. Still, he also said conditions are “far from where we would all like them.”
BHP Billiton (BLT) dropped 3.4 percent to 1,779 pence. Output of iron ore, its biggest earner, was 40.2 million metric tons in the three months to March 31, missing the median estimate of 42.3 million tons in a Bloomberg survey.
A gauge of European mining companies slid to its lowest level since July 2009, with Rio Tinto Group and Anglo American Plc retreating 3.6 percent to 2,854.5 pence, and 2.1 percent to 1,553 pence, respectively.
Preferred shares of Volkswagen lost 2.9 percent to 141.45 euros. BMW decreased 2.8 percent to 65 euros. European car sales are heading toward a 20-year low as registrations in March fell 10 percent, led by Germany’s auto market, which plummeted 17 percent, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today.
A measure of auto-related companies fell the most of the 19 industry groups on the Stoxx 600.
Tesco declined 3.9 percent to 369.8 pence after the U.K.’s largest retailer said it will exit the U.S. and took a 1.2 billion-pound charge to end the Fresh & Easy business. So-called trading profit fell 13 percent to 3.45 billion pounds in the 52 weeks ended Feb. 23, the company said.
BASF SE slid 3.8 percent to 65.55 euros, its lowest price in almost five months, after Nomura Holdings Inc. cut its recommendation on the world’s biggest chemicals maker to neutral, the equivalent of hold, from buy, citing above-average downside risks to consensus forecasts.
Bayer AG slipped 4.3 percent to 77.58 euros after a U.S. appeals court ruled the company’s patent on the birth control pill Yaz is invalid, ensuring Actavis Inc. and Novartis AG’s Sandoz unit can sell copies of the contraceptive.
ASML Holding NV (ASML) climbed 2.5 percent to 52.55 euros. Europe’s largest semiconductor-equipment supplier posted first- quarter sales of 892 million euros, topping the 874 million-euro analyst estimate. The company also announced a share buyback program of as much as 1 billion euros and said Chief Executive Officer Eric Meurice will step down as of July.
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