European stocks declined the most in three weeks as Adidas AG lowered its profit forecast and Banco Espirito Santo SA led a plunge in Portuguese equities.
Adidas slumped the most in 15 years as the sporting-goods maker said the crisis in Ukraine will reduce its profit from Russia. Banco Espirito Santo sank 42 percent after making provisions of 4.3 billion euros ($5.7 billion). Afren Plc tumbled 26 percent after suspending senior managers following an investigation into unauthorized payments. Royal Dutch Shell Plc (RDSA) added 2.5 percent after beating profit estimates.
The Stoxx Europe 600 Index fell 1.3 percent to 335.99 at the close of trading, extending its decline in July to 1.7 percent. The benchmark posted its first back-to-back monthly losses in two years. Portugal’s PSI 20 Index dropped 3.1 percent today as benchmark indexes retreated in every western-European market except Iceland. Germany’s DAX Index slid 1.9 percent and France’s CAC 40 Index slipped 1.5 percent. The U.K.’s FTSE 100 Index decreased 0.6 percent.
“The periphery fears are back in place,” Soeren Steinert, who helps manage about $24 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, said in a phone interview. “If you look at Portugal today, it may not signal a second financial crisis, but it shows the crisis is not over and this is weighing on sentiment.”
Adidas sank 15 percent to 59.41 euros after forecasting net income of 650 million euros in 2014. The owner of the Adidas and Reebok brands had estimated profit of 830 million euros to 930 million euros. The German sportswear company said the conflict between separatists and the Ukrainian government poses increasing risks to spending on its products in Russia and neighboring countries.
The European Union froze the assets of two Russian oligarchs last night as part of a broader range of measures to make President Vladimir Putin withdraw his support from rebels in eastern Ukraine. The 28-nation club has toughened its measures against the Kremlin after Malaysia Airlines Flight 17 was shot down on July 17. The U.S. says the missile was fired from an area controlled by pro-Russian separatists.
Portuguese equities slid as Banco Espirito Santo tumbled 42 percent to 20.1 euro cents. The Bank of Portugal ordered the lender to raise more capital after the provisions forced it to announce a 3.6 billion-euro loss for the first half of 2014.
Afren slumped 26 percent to 110 pence. The U.K. explorer of oil in Africa and northern Iraq suspended Chief Executive Officer Osman Shahenshah and Chief Operating Officer Shahid Ullah after an independent review found proof of unauthorized payments to both managers. The investigation didn’t find evidence that other board members were involved, the company said in a statement.
Alcatel-Lucent SA plunged 6.7 percent to 2.64 euros. The French network-equipment maker reported sales of 3.28 billion euros in the second quarter, less than the 3.3 billion-euro average estimate of analysts surveyed by Bloomberg.
Balfour Beatty Plc slid 5.9 percent to 237.9 pence. The U.K. construction company ended talks to merge with rival British builder Carillion Plc after refusing to include its New York-based infrastructure consulting business in the deal. Carillion retreated 5.4 percent to 334.3 pence.
Grifols SA tumbled 14 percent to 33.82 euros after posting first-half profit that missed analysts’ estimates. Europe’s largest maker of blood-plasma products said sales of some products fell because of delays in tendering processes in several of its markets.
Shell advanced 2.5 percent to 2,441 pence. Europe’s biggest oil company reported profit, excluding one-off items and inventory changes, that climbed 33 percent to $6.1 billion from $4.6 billion a year earlier. That beat the $5.6 billion average estimate of analysts surveyed by Bloomberg. Higher energy prices in the U.S. contributed to the increase in profit.
Subsea 7 SA rose 1.9 percent to 105 pence. The offshore oil-services provider increased its share buyback by $200 million as it posted better-than-projected profit and sales.
The volume of shares changing hands in Stoxx 600-listed companies was 26 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
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