European stocks were little changed as investors weighed U.S. retail and home-sales (ETSLTOTL) data, as well as comments from people familiar with the debate saying the European Central Bank is considering a smaller-than-normal cut in the deposit rate if officials decide to take it negative.
Metro AG climbed 2.4 percent after Barclays Plc upgraded its recommendation on the retailer. Diageo Plc dropped 1.2 percent after Chief Executive Officer Ivan Menezes said uncertainties in the global economy will drag on sales. Alcatel-Lucent slid 3.5 percent after announcing a capital increase.
The Stoxx Europe 600 Index climbed 0.1 percent to 322.91 at the close of trading. The benchmark gauge yesterday fell from a five-year high. It is trading at 15.1 times projected earnings, near its highest level since the end of 2009 and more than the 10-year average of 12.1 times earnings, data compiled by Bloomberg showed.
“The market will take it positively because it shows the ECB will do everything it can to get consumption going, loans flowing through the system again,” Michael Woischneck, who helps oversee about $1.6 billion in equities at Lampe Asset Management in Dusseldorf, Germany, said by telephone, referring to the report on the ECB. “I don’t know if that’s a wise thing to do from a monetary perspective. From a macro perspective and after the most recent inflation data, they really want to make banks put money to work.”
National benchmark indexes retreated in 13 of the 18 western European markets, with Spain’s IBEX 35 and Greece’s ASE each dropping 0.7 percent. The U.K.’s FTSE 100 lost 0.3 percent, France’s CAC 40 slipped 0.1 percent and Germany’s DAX advanced 0.1 percent.
The Stoxx 600 gained as much as 0.4 percent after a Bloomberg News report cited two people with knowledge of the discussions as saying ECB Policy makers would reduce the rate for commercial lenders who park excess cash at the central bank to minus 0.1 percent from zero.
It would be the first time the ECB has adjusted interest rates by less than a quarter of a percentage point. The concept, which has been discussed by Governing Council members, doesn’t yet have a consensus, the people said.
In the U.S., retail sales rose more than forecast in October. The 0.4 percent increase was the most in three months and followed no change in September, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 0.1 percent October advance.
Separate data showed that purchases of previously-owned U.S. homes fell in October to the lowest level in four months. Sales dropped 3.2 percent from a month earlier to a 5.12 million annual rate, according to the National Association of Realtors in Washington. The median forecast of 76 economists surveyed by Bloomberg projected a 5.14 million pace.
The Fed releases minutes of its October meeting today. The document will reveal more details on the decision to maintain its pace of asset purchases at $85 billion a month. Fed policy makers will probably trim the bond-buying to $70 billion at their March 18-19 meeting, according to the median estimate in a Bloomberg survey.
Fed Chairman Ben S. Bernanke said late yesterday the central bank will probably maintain its target interest rate long after ending its monthly bond purchases.
Metro gained 2.4 percent to 36.63 euros, posting the biggest two-day increase since November 2011. Barclays upgraded Germany’s biggest retailer to overweight, similar to a buy rating, from equal weight, citing the possible sale of a Russian operation, improving sales trends in key divisions and the possibility of reducing borrowing costs as expensive debt matures. Shares soared 7.9 percent yesterday after Metro said it is considering a partial initial public offering of its Russian Cash & Carry unit.
Societe Television Francaise 1 (TFI) jumped 5 percent to 13.99 euros after France beat Ukraine to advance to next year’s soccer World Cup. TF1, which bought the broadcast rights to the competition, yesterday fell as much as 1.3 percent in intraday trading as Natixis wrote that the probability of the French national team qualifying for the tournament was “very low.”
Zodiac Aerospace (ZC) climbed 3.1 percent to 122.60 euros, the highest price since at least February 1993, after the world’s largest maker of airline seats posted full-year net income of 370.9 million euros ($499 million). That exceeded the 355.5 million-euro average of analysts in a Bloomberg survey.
Diageo Plc lost 1.2 percent to 2,005 pence after CEO Menezes told journalists yesterday he expects the “uncertain” global economy to continue to affect sales growth for the world’s biggest distiller.
Menezes said the company was committed to its profitability target despite slowing growth in some economies. Diageo said in August 2011 it would increase sales excluding acquisitions by an average of 6 percent a year and widen its operating-profit margin by 200 basis points over three years.
Alcatel-Lucent lost 3.5 percent to 2.80 euros after Bank of America Corp. and JPMorgan Chase & Co. placed 660 million preferential subscription rights to the company’s shares to institutional investors. The rights are linked to the network-equipment maker’s American Depositary Receipts, according to a statement.
PSA Peugeot Citroen (UG) tumbled 7 percent to 10.17 euros, for the biggest decline on the Stoxx 600. The carmaker’s plan to raise funds through a share sale have hit a snag as China’s Dongfeng Motor Corp. seeks a smaller stake than first discussed, people familiar with the matter said.
ThyssenKrupp AG declined 1.6 percent to 19.09 euros after Reuters cited bankers familiar with the matter as saying that the German steelmaker plans to boost capital by 10 percent. Spokesman Robin Zimmer said in e-mailed comments the company does not rule out a capital increase.
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