Most European Stocks Drop on Yellen’s Rate Remarks

March 20 (Bloomberg) -- Peter Cook reports on Fed Chairman Janet Yellen’s first press conference on Bloomberg Television’s “Bloomberg Surveillance.” (Source: Bloomberg)

Most European stocks declined as investors weighed Federal Reserve Chair Janet Yellen’s remark that benchmark interest rates could rise about six months after the central bank ends bond purchases.

GlaxoSmithKline Plc lost 1.6 percent after saying its experimental lung-cancer drug failed to meet its objectives in a clinical study. Rheinmetall AG fell the most in four months after a report that Germany stopped the defense company from executing a deal in Russia because of the Ukraine crisis. Munich Re rose 1.4 percent after announcing a share buyback.

The Stoxx Europe 600 Index added less than 0.1 percent to 327.67 at the close of trading, as two shares fell for every one that rose. The benchmark gauge has dropped 0.2 percent in 2014, after two years of gains, as the Fed began trimming its asset buying by $10 billion a month and a conflict in Ukraine led to tensions between Russia and the U.S.

“One unpleasant surprise for markets is the Fed is more hawkish than investors currently are,” Ralf Zimmermann, an equity analyst at Bankhaus Lampe KG, wrote in an e-mail. “The central bank seems to be more willing and aggressive about raising interest rates than investors currently perceive or hope for. Investors may realize that the free lunch for markets may end. This new uncertainty creates volatility and downside risks for stocks.”

Photographer: Andrew Harrer/Bloomberg

U.S. Federal Reserve Chair Janet Yellen. Close

U.S. Federal Reserve Chair Janet Yellen.

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Photographer: Andrew Harrer/Bloomberg

U.S. Federal Reserve Chair Janet Yellen.

National benchmark indexes dropped in 11 of the 18 markets in western Europe. Germany’s DAX gained 0.2 percent, the U.K.’s FTSE 100 slid 0.5 percent and France’s CAC 40 added 0.5 percent.

Rate Forecast

Yellen, speaking after chairing a Federal Open Market Committee meeting for the first time, said policy makers have stopped linking the interest-rate policy to an employment threshold. Even so, pressed to define how long rates will remain low after quantitative easing ends, she said the term would be “on the order of around six months.”

Quarterly Fed forecasts also showed more officials predicting that the benchmark rate, now close to zero, will rise to at least 1 percent at the end of 2015 and 2.25 percent a year later. The central bank said it would trim its monthly bond purchases by $10 billion to $55 billion.

In the U.S., jobless claims rose by 5,000 to 320,000 in the week ended March 15, a Labor report in Washington showed. The median estimate of analysts surveyed by Bloomberg News had called for an increase to 322,000.

Clinical Trial

Glaxo dropped 1.6 percent to 1,629 pence. The drugmaker said its MAGE-A3 treatment failed to meet its objectives in a clinical trial. The medicine didn’t significantly extend disease-free survival in tests compared with a placebo.

Rheinmetall slid 4.1 percent to 51.31 euros. Germany’s Economy and Energy Minister Sigmar Gabriel has stopped the company from building a military training center in Russia’s Volga region, Focus magazine reported, citing the ministry. The contract was valued at more than 100 million euros.

Ladbrokes Plc lost 4.5 percent to 134.1 pence, its lowest price since January 2012. The bookmaker plunged 12 percent yesterday after U.K. Chancellor of the Exchequer George Osborne raised the duty on in-store gaming machines. William Hill Plc retreated 1.4 percent to 346.6 pence today.

Intu Properties Plc (INTU) fell 4.6 percent to 308.3 pence. The U.K.’s largest shopping-mall owner has agreed to buy three retail centers from Westfield Group for 867.8 million pounds ($1.4 billion) including working capital.

Share Placement

Meyer Burger Technology AG plummeted 15 percent to 14.45 Swiss francs, its biggest drop in more than five years. The supplier of machinery to solar-panel makers sold 4.8 million shares at 16.20 francs each.

Munich Re (MUV2) advanced 1.4 percent to 152.34 euros after saying it will buy back shares worth 1 billion euros before its 2015 shareholder meeting. The world’s biggest reinsurer also projected a 9.1 percent drop in 2014 profit.

Lanxess AG climbed 5.3 percent to 53.95 euros. The chemical maker projected first-quarter earnings before interest, taxes, depreciation and amortization of about 200 million euros, higher than the 174 million euros over the same period last year.

Next Plc (NXT) rose 2.3 percent to 6,730 pence. The U.K.’s second-largest clothing retailer said underlying pretax profit rose 12 percent to 695.2 million pounds in the year through January, more than the 694 million-pound average of analysts’ estimates.

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

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Srinivasan Sivabalan, Will Hadfield

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