Europe Stocks Decline as Bank Shares, Automakers Retreat

Photographer: Kerim Okten/Bloomberg

Turkey’s lira jumped against the dollar today after the central bank raised its repurchase rate to 10 percent from 4.5 percent and boosted other key borrowing costs at a late-night emergency meeting. Close

Turkey’s lira jumped against the dollar today after the central bank raised its... Read More

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Photographer: Kerim Okten/Bloomberg

Turkey’s lira jumped against the dollar today after the central bank raised its repurchase rate to 10 percent from 4.5 percent and boosted other key borrowing costs at a late-night emergency meeting.

European stocks fell, as automakers and retailers declined, and the Turkish central bank’s interest rate increases failed to support emerging-market currencies.

Fiat (F) SpA slid 4.1 percent after posting earnings that missed analysts’ forecasts. Nordea Bank AB (NDA) lost 2.3 percent after its chief executive said it will need to cut more jobs to adjust to slow growth. Mulberry Group Plc tumbled 27 percent after saying full-year pre-tax profit will miss market estimates. Anglo American Plc gained 5.7 percent after saying fourth-quarter platinum production rose 25 percent.

The Stoxx Europe 600 Index dropped 0.6 percent to 322.38 at the close of trading, paring earlier losses of as much as 1.5 percent. The gauge had jumped as much as 1.2 percent after Turkey’s central bank raised interest rates.

“You see volatile equity markets today because of vulnerable emerging-market currencies,” said Markus Wallner, an equity strategist at Commerzbank AG in Frankfurt. “These events are reigniting fears in equity markets as a rise in interest rates by Turkey’s central bank does not appear to have helped. As we see with the Turkish lira today, this is a continuing problem which has not been solved yet.”

The VStoxx Index, a gauge that measures volatility expectations for the Euro Stoxx 50 Index, jumped 9.2 percent to 21.81, its highest level since Oct. 9. The volume of shares changing hands in Stoxx 600 companies was 42 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

Emerging-Market Currencies

A gauge of 20 emerging-market currencies tracked by Bloomberg fell 0.2 percent, its 12th drop in 13 days. Turkey’s lira erased earlier gains, falling as much as 3 percent against the dollar after the rate hikes failed to ease investor concern that the economy will be hurt by a slowdown in China and a tapering of U.S. stimulus. The currency had risen as much as 4 percent after the central bank raised its repurchase rate to 10 percent from 4.5 percent and boosted other key borrowing costs.

The Borsa Istanbul 100 Index fell 2.3 percent, after earlier advancing as much as 2.8 percent.

National benchmark gauges declined in 16 of the 18 western-European markets. The U.K.’s FTSE 100 lost 0.4 percent, Germany’s DAX slid 0.8 percent and France’s CAC 40 retreated 0.7 percent. The Swiss Market Index fell 0.6 percent.

The Federal Reserve will conclude its final two-day monetary-policy meeting under Chairman Ben S. Bernanke today. He leaves his post on Jan. 31. The central bank will probably reduce its monthly bond purchases by $10 billion, followed by further increments of the same amount at the next five meetings before announcing an end to the program no later than December, according to a Bloomberg survey this month.

Fiat Declines

Fiat slid 4.1 percent to 7.24 euros. The Turin-based carmaker said fourth-quarter earnings before interest, taxes and one-time items rose 5 percent to 931 million euros ($1.27 billion) from 887 million euros a year earlier. That missed the 1.12 billion-euro average of six analyst estimates compiled by Bloomberg.

A gauge of auto-related stocks posted the second-worst performance of the 19 industry groups on the Stoxx Europe 600 Index. Volkswagen AG slid 2 percent to 191.70 euros and Bayerische Motoren Werke AG lost 0.9 percent to 80.83 euros.

Nordea Bank lost 2.3 percent to 87.85 kronor. Scandinavia’s biggest bank will need to cut more than the 2,500 jobs already axed to adjust to slow growth, Chief Executive Officer Christian Clausen said. Nordea now targets 900 million euros in measures to make the bank leaner through 2015, compared with a previous cost-saving goal announced in 2012 of 450 million euros.

Banco Espirito Santo SA fell 2 percent to 1.16 euros and Credit Agricole SA declined 1.5 percent to 10.06 euros.

Mulberry Slides

Mulberry tumbled 27 percent to 654 pence. The British luxury-handbag maker also said full-year wholesale sales will fall by about 10 percent because of order cancellations from Korean customers.

Burberry Group Plc, the U.K.’s largest luxury-goods maker, slipped 1.4 percent to 1,452 pence. A measure of personal and household-goods related stocks fell the most on the Stoxx 600.

J Sainsbury Plc lost 2.3 percent to 348.5 pence after announcing that Justin King will step down as chief executive officer in July after a decade in the role. Commercial Director Mike Coupe will succeed him as head of the U.K.’s third-biggest supermarket company.

Anglo American (AAL), which owns Anglo American Platinum Ltd., advanced 5.7 percent to 1,420.5 pence. The owner of the world’s biggest platinum mine said fourth-quarter production of the metal rose 25 percent as it recovered from labor disruptions. It also posted a 25 percent increase in output at its Kumba Iron Ore unit and a 24 percent rise in copper production.

Antofagasta Advances

Antofagasta Plc (ANTO) jumped 6.1 percent to 872.5 pence. The copper company controlled by Chile’s billionaire Luksic family said output climbed to a record 721,200 metric tons in 2013. That beat Liberum Capital Ltd.’s 705,000-ton estimate.

Vodafone Group Plc rose 1.3 percent to 226.3 pence, after earlier jumping as much as 3.1 percent. AT&T Inc. remains interested in a potential acquisition of Europe’s largest mobile-phone operator, even after giving up the option to bid for six months, according to people familiar with the situation.

AT&T is still assessing a takeover, and made a public announcement on Jan. 27 to satisfy British stock-market regulations designed to limit merger speculation, the people, who asked not to be identified, said.

Arkema SA (AKE) increased 3.6 percent to 80 euros. Goldman Sachs Group Inc. upgraded the French chemicals maker to conviction buy from neutral, citing the possibility of merger and acquisition activity in the industry because of high levels of cash, and the company’s exposure to an economic recovery in Europe.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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