Volkswagen AG dropped 1.5 percent, leading automakers lower, as it sold 2 billion euros ($2.7 billion) of preferred shares to help pay for the takeover of Scania AB. Dufry AG rallied the most since October 2011 after agreeing to buy travel retailer Nuance Group. Coloplast A/S rose 3.2 percent after projecting annual growth of as much as 10 percent in revenue excluding acquisitions for the next three to five years.
The Stoxx Europe 600 Index added less than 0.1 percent to 343.56 at the close in London. The gauge, which reached a six-year high on June 2, trades at 15.3 times the projected earnings of its constituents, approaching the highest level since 2009. It rallied 1.9 percent in May as ECB President Mario Draghi pledged the central bank was ready to ease monetary policy in June if necessary.
“We’re at the beginning of a consolidation phase in European markets as we go into the summer months,” Christian Stocker, a strategist at UniCredit Bank AG in Munich, said by phone. “We’re nearing a top in the current upward trend. There is concern about valuations of European stocks. The ECB will have to introduce more measures tomorrow than anticipated by investors for markets to go higher.”
The ECB announces its interest-rate decision tomorrow in Frankfurt, followed by Draghi’s press conference. A Eurostat report showed that the euro region’s economy expanded 0.2 percent in the first quarter, as predicted by economists surveyed by Bloomberg. Gross domestic product increased 0.2 percent in the previous quarter as well.
Options data signal that investor optimism has increased in the month since Draghi’s speech following the ECB’s meeting in May. One-month options in an exchange-traded fund of companies from Sanofi to Banco Santander SA are trading at the steepest discount in more than a year to three-month contracts, data compiled by Bloomberg show.
A release by the ADP Research Institute showed companies in the U.S. added 179,500 workers in May, compared with 215,100 the previous month. The median estimate of economists in a Bloomberg survey had called for 210,000.
Volkswagen dropped 1.5 percent to 192.80 euros after selling preferred shares at 191 euros apiece to institutional investors as part of funding its acquisition of Swedish truckmaker Scania. Europe’s biggest carmaker is spending 6.7 billion euros for the stake it doesn’t already own in Scania.
A gauge of auto companies was the third-worst performer among 19 industry groups in the Stoxx 600. PSA Peugeot Citroen dropped 1.6 percent to 9.98 euros and Fiat SpA declined 1.7 percent to 7.49 euros.
Repsol SA dropped 3.6 percent to 20.11 euros after Petroleos Mexicanos sold a 7.9 percent stake in the Spanish oil company at 20.10 euros a share. Pemex, as Mexico’s state-owned producer is known, raised $2.9 billion in the sale. Reuters reported that the company plans to sell the remaining Repsol stake in August.
Tesco Plc slid 1.3 percent to 293.5 pence. Britain’s biggest grocer said comparable sales in the U.K. fell 3.8 percent in the first quarter. Analysts on average had forecast a 4 percent drop. Trading conditions remain challenging in the U.K. grocery market, Tesco also said in a statement.
Dufry jumped 6.4 percent to 155 francs. The Swiss duty-free store operator said its $1.73-billion purchase of Nuance, owned by PAI Partners and Gecos SpA, will boost cash earnings next year. Nuance owns more than 350 stores and generated sales of 2.1 billion francs ($2.34 billion) last year, according to a statement.
Coloplast climbed 3.2 percent to 495.60 kroner. The Danish maker of medical products said organic revenue will grow 7 percent to 10 percent each year in the next three to five years, while the margin on earnings before interest and taxes will expand by 0.5 percentage points to 1 percent.
Telecom Italia SpA added 2.6 percent to 93.8 euro cents after Kepler Cheuvreux SA said Italy has the greatest potential among large European economies for recovery in productivity and profitability. The brokerage said Telecom Italia remains one of its five most-preferred stocks.
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