European Stocks Retreat on Clashes in Eastern Ukraine

European stocks declined, paring their third weekly gain, as Ukrainian forces clashed with pro-Russian separatists in the east of the country.

Software AG slid 2.1 percent after first-quarter sales missed analysts’ estimates. Royal Bank of Scotland Group Plc rallied the most since January 2012 after saying quarterly profit tripled and impairments fell. Deutsche Telekom AG, which owns two-thirds of T-Mobile US Inc. (TMUS), added 1.1 percent as people familiar with the matter said Sprint Corp. may bid for the American mobile-phone operator.

The Stoxx Europe 600 Index retreated 0.2 percent to 337.76 at the close of trading, paring its advance this week to 1.3 percent. The benchmark briefly rose as much as 0.2 percent today as a report showed the U.S. economy created jobs at a faster-than-estimated rate last month. Western-European markets, with the exception of the U.K., Ireland and Denmark, were closed yesterday for the May Day holiday.

“Right now it’s clear that positive economic data out of the U.S. is not having as much of an impact on investors,” said Andreas Lipkow, a senior market strategist at Kliegel & Hafner AG in Berlin. “The Ukraine is a negative driver and is overshadowing the day’s previous themes.”

European equities fell as Ukrainian President Oleksandr Turchynov said that forces loyal to the acting government in Kiev have killed, wounded or captured many pro-Russian separatists during an operation in the east of the country.

U.S. Jobs

A Labor Department report showed that U.S. employers increased their payrolls last month at the fastest pace since January 2012. Total employment climbed by 288,000 workers in April, more than the 218,000 median projection of economists. Employers made net hires of a revised 203,000 in March. The unemployment rate slipped to 6.3 percent, lower than the median estimate in a Bloomberg News survey.

In Europe, an index of euro-area manufacturing rose to 53.4 last month from 53.0 in March. The final reading from Markit Economics exceeded the firm’s initial estimate and the average projection of economists surveyed by Bloomberg. Figures greater than 50 mean that activity expanded.

National benchmark indexes advanced in 11 of the 18 western-European markets. The U.K.’s FTSE 100 gained 0.2 percent, while France’s CAC 40 retreated 0.7 percent. Germany’s DAX lost 0.5 percent.

Software AG Slips

Software AG slipped 2.1 percent to 26.54 euros. The German maker of business-process applications posted three-month sales of 208.9 million euros ($289 million), less than the 219.2 million euros projected by analysts in a Bloomberg survey. Adjusted Ebit dropped 27 percent to 30.5 million euros from 41.6 million euros in the year-earlier period.

BNP Paribas SA (BNP) fell 3 percent to 52.48 euros, completing its biggest two-day decline since June. Credit Suisse Group AG reduced its rating on the lender to neutral from outperform, meaning that investors should stop buying the shares. The brokerage said France’ biggest bank still needs to make investments in 2014 before it can implement its strategy. BNP announced its targets for 2016 in March, setting out goals for increasing revenue and profitability.

RBS jumped 8.2 percent to 331.7 pence after saying net income tripled to 1.2 billion pounds ($2 billion) in the first three months of 2014. Impairment charges dropped by 671 million pounds, driven by improvements at Ulster Bank in Northern Ireland and its U.K. corporate-banking division. The bank’s net-interest margin -- the difference between its income from lending and its cost of funding -- will probably increase during the remainder of 2014, RBS predicted.

Deutsche Telekom

Deutsche Telekom added 1.1 percent to 12.22 euros, completing its largest weekly increase this year. Sprint met with six banks in April to arrange debt before it makes an offer for T-Mobile, according to the people. Masayoshi Son, chief executive officer of Sprint’s majority owner SoftBank Corp., may make a formal bid in June or July, one of the people said.

InterContinental Hotels Group Plc, which owns the Holiday Inn and Crowne Plaza brands, rallied 8.2 percent to 2,190 pence, the highest price since it split from Six Continents Plc in 2003. Revenue per available room, a measure of occupancy and rates, rose 6 percent in the first quarter, driven by better-than-estimated growth in Europe and the Americas. The company also said it will pay a special dividend of $750 million.

Societe Television Francaise 1 rose 6.1 percent to 13 euros, halting a five-day losing streak. The French broadcaster, which runs the Eurosport network alongside Discovery Communications Inc., reported a profit of 14.6 million euros for the three months through March. That compared with a loss of 6.3 million euros in 2013, according to a statement.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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