European stocks declined as wrangling between Greek politicians following the shutdown of the state broadcaster overnight renewed concerns about the stability of the country’s government.
Societe Generale SA, Barclays Plc and Deutsche Bank AG led a selloff in banks, with each falling more than 2 percent. Severn Trent Plc (SVT) sank the most since October 2006 after a consortium of investors dropped their bid for the water utility. Kabel Deutschland Holding AG jumped 8.2 percent after Vodafone Group Plc confirmed it approached the company about a takeover.
The benchmark Stoxx Europe 600 Index (SXXP) fell 0.4 percent to 290.68 at the close of trading, erasing earlier gains of as much as 0.7 percent. The gauge has lost 6.4 percent since May 22 amid speculation the Federal Reserve will taper its bond-buying program that helped drive the measure to its highest level since June 2008.
“Markets are feeling very uneasy about the recent developments in Greece,” said Ishaq Siddiqi, a market strategist at ETX Capital in London. Investors are concerned “that the country may slip behind in meeting its year-end targets with its international creditors.”
Greece’s benchmark ASE Index dropped 3.2 percent, extending its slide so far this week to 12 percent, as Prime Minister Antonis Samaras shut the nation’s public broadcaster overnight. The Pasok and Democratic Left parties today submitted a draft law to overturn the ruling.
Greece became the first developed country to be cut to emerging-market status by MSCI Inc. after the local equity gauge plunged 83 percent since 2007. The Mediterranean nation failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability, according to a statement yesterday from MSCI, whose equity indexes are tracked by investors with about $7 trillion in assets.
The volume of shares changing hands in Stoxx 600 companies was 5.5 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
Societe Generale SA slid 2.5 percent to 28.46 euros, Barclays lost 2.9 percent to 295.8 pence and Deutsche Bank declined 3.2 percent to 34.40 euros.
Severn Trent (SVT) tumbled 8.9 percent to 1,765 pence after Borealis Infrastructure Management Inc. and its Kuwaiti-British partners late yesterday abandoned their 5.3 billion-pound ($8.3 billion) bid for the U.K. water utility as the offer deadline expired.
Elan Corp. (ELN) fell 3.4 percent to 9.80 euros. Shareholders risk losing $2 billion by listening to the company’s board and rejecting Royalty Pharma’s takeover bid at a ballot next week.
While Royalty Pharma boosted its unsolicited offer to as much as $15.50 a share this month, at least five analysts covering Elan see the stock falling if that bid disappears, according to data compiled by Bloomberg. UBS AG estimates a 28 percent plunge to $9.70, which would wipe out $2 billion of market value.
Kabel Deutschland (KD8) jumped 8.2 percent to 80.84 euros, for the biggest advance on the Stoxx 600, after Vodafone, the world’s second-largest wireless carrier, confirmed it discussed acquiring the German cable operator to expand in the broadband and TV market.
Vodafone contacted Kabel Deutschland, which has a market value of about 7 billion euros ($9.3 billion), to discuss an offer within the past week, Bloomberg News reported yesterday, citing people with knowledge of the matter. Vodafone slipped 2.2 percent to 181 pence.
“I’ve been waiting for M&A for so long; companies have strong balance sheets so that they have the wherewithal to do it, but it’s whether they have the confidence,” Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about $6.1 billion, said in a telephone interview. “I would expect to see more activity in the coming months.”
Ziggo NV (ZIGGO), a Dutch cable-television operator, advanced 4.5 percent to 29.58 euros, after Vodafone confirmed it approached Kabel Deutschland. Liberty Global Inc., which owns an 18 percent stake in Ziggo, had also considered bidding for the German company, two people familiar with the matter said in April.
British Sky Broadcasting Group Plc rose 1.4 percent to 788.5 pence after Banco Espirito Santo SA wrote in a report that News Corp. may make a new bid for the U.K.’s largest pay-TV broadcaster after its shareholders approve a plan to split off publishing operations. Espirito said it sees a possible takeover valuation for BSkyB of 990 pence a share.
National Express Group Plc rallied 3 percent to 212.4 pence as Elliott Capital Advisors sold its remaining 9.9 percent stake in the U.K.’s largest coach operator.
Inditex SA (ITX) added 3.5 percent to 101.30 euros after reporting a 5.2 percent increase in first-quarter sales to 3.59 billion euros. The world’s biggest clothing retailer also forecast stable profitability even after first-quarter profit advanced at the slowest pace in four years.
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