Europe Stocks Drop, Completing Worst January Since 2010

European stocks declined this week, with the Stoxx Europe 600 Index posting its worst start to a year since 2010, amid earnings results that missed analysts’ estimates and a rout in emerging-market currencies.

BG Group Plc plunged 19 percent after the U.K. oil and gas producer said 2013 earnings would be lower than forecast. Diageo Plc lost 7.5 percent after the world’s biggest distiller reported sales growth that missed estimates. Lanxess AG climbed 8.3 percent after the chemical maker named Merck KGaA’s finance chief as its chief executive officer. Merck tumbled 13 percent.

The Stoxx 600 dropped 0.7 percent to 322.52 this week, bringing its monthly decline to 1.8 percent. The benchmark index fell for a second week as emerging-market currencies slid and the Federal Reserve reduced the size of its monthly bond purchases for a second consecutive time.

“We are in risk-off mode as there are concerns that problems in some emerging markets could spill over,” Thomas Muhlberger, a fund manager who helps oversee 400 million euros ($540 million) at Johannes Fuhr Asset Management in Frankfurt. “This has resulted in selling, especially in oil companies.”

Emerging-market currencies fell this week as a purchasing managers’ index for Chinese manufacturing signaled the first contraction since July. The Federal Open Market Committee said it will cut monthly bond purchases by $10 billion to $65 billion, sticking to a plan for a gradual withdrawal from its unprecedented monetary easing.

CAC, DAX

National benchmark indexes fell in 13 of the 18 western-European markets this week. Germany’s DAX lost 0.9 percent, and the FTSE 100 in the U.K. dropped 2.3 percent. France’s CAC 40 rose 0.1 percent.

BG sank 19 percent after saying reduced liquefied natural gas shipments from Egypt and U.S. forward-gas prices will hurt profit. It forecast production of 590,000 to 630,000 barrels a day this year, lower than 2013’s 633,000 barrels a day.

A gauge of oil and gas producers posted the biggest drop among 19 industry groups this week, falling 3.3 percent. Tullow Oil Plc, an explorer active in Africa, lost 8.1 percent.

Diageo dropped 7.5 percent after it said organic sales rose 1.8 percent in the six months through December, missing the median analyst estimate of 3.5 percent.

Serco Group Plc (SRP) slumped 14 percent. The U.K. services provider said that revenue probably declined in 2013 because it won fewer contracts.

Mulberry Drops

Mulberry Group Plc sank 26 percent after the British luxury-bag maker said full-year pretax profit will miss analysts’ estimates.

Banco Popolare SC (BP) tumbled 16 percent after Italy’s fourth-biggest bank said it planned to sell as much as 1.5 billion euros of shares to bolster capital.

Lanxess climbed 8.3 percent, while Merck plunged 13 percent. Current CEO Alex Heitmann will leave as of Feb. 28 and Matthias Zachert will start May 15.

Software AG climbed 7.5 percent after the German company forecast that earnings before interest and taxes may increase by as much as 10 percent in 2014 from 260.7 million euros.

Ericsson AB rose 6.6 percent. The world’s largest maker of wireless networks said gross margin expanded to 37.1 percent of sales in the fourth quarter from 31.1 percent a year earlier. That beat analysts’ estimates.

Anglo American Plc (AAL) gained 7.2 percent. The owner of the world’s largest platinum mine said production of the metal rose 25 percent in the fourth quarter.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.