European stocks fell to the lowest level in more than three months as companies including ArcelorMittal (MT) and Vinci SA posted worse-than-expected earnings.
ArcelorMittal dropped the most since October 2012 after also lowering its full-year profit forecast. Vinci slipped the most in almost three years. Iliad SA retreated 7 percent after offering $15 billion for a controlling stake in T-Mobile US Inc. Belgacom SA gained 4.8 percent after raising its full-year earnings outlook.
The Stoxx Europe 600 Index fell 1.2 percent to 331.91 at the close of trading. It pared an earlier drop of as much as 1.5 percent as worse-than-forecast U.S. payrolls data increased optimism the Federal Reserve will keep interest rates low for longer. The benchmark gauge trades at 15 times estimated earnings, near last month’s four-and-a-half year high of 15.7, data compiled by Bloomberg show.
“In Europe, we’re seeing a weak economy with very bad currency effects on companies and unattractive valuations,” said Jacques Porta, who helps oversee $780 million at Ofi Gestion Privee in Paris. “That doesn’t give investors a good feeling about buying the market. We’ve seen weak results in Europe, so sentiment is turning bearish.”
A Markit Economics purchasing managers’ index of euro-zone manufacturing was unchanged in July at 51.8. Economists had called for 51.9. A reading above 50 means activity increased. A PMI index for the U.K. fell to the lowest level in a year, while a measure of manufacturing in Italy missed estimates, posting growth at the slowest pace in eight months.
Employers in the U.S. added 209,000 jobs in July, following a 298,000 gain in June that was stronger than previously reported, figures from the Labor Department showed today in Washington. The median forecast in a Bloomberg survey of economists called for a 230,000 increase. The jobless rate climbed to 6.2 percent from 6.1 percent in June as more people entered the labor force.
The Thomson Reuters/University of Michigan final index of consumer confidence in July fell to 81.8, from 82.5 in June. That matched the median economist forecast. Another report showed the Institute for Supply Management’s manufacturing index increased in July to 57.1 from 55.3 a month earlier. The median projection of economists called for a rise to 56.
National benchmark indexes fell in 16 of the 17 western-European markets open today. Markets in Switzerland are closed for the National Day holiday. The U.K.’s FTSE 100 Index lost 0.8 percent, France’s CAC 40 slid 1 percent and Germany’s DAX tumbled 2.1 percent. All three indexes have erased their gains for the year.
ArcelorMittal retreated 6.1 percent to 10.68 euros. The world’s largest steelmaker said second-quarter earnings before interest, taxes, depreciation and amortization climbed to $1.76 billion from $1.7 billion a year earlier. That missed the $1.84 billion average of analyst estimates compiled by Bloomberg. The company said iron-ore prices fell short of its expectations. ArcelorMittal predicted 2014 Ebitda in excess of $7 billion. It had previously forecast Ebitda of about $8 billion.
Vinci slipped 6.3 percent to 48.36 euros. Europe’s biggest builder reported first-half earnings before interest and taxes of 1.54 billion euros ($2.1 billion), missing the median analyst prediction of 1.63 billion euros. Vinci also forecast a drop in 2014 revenue, compared with an earlier projection of little change.
Iliad slid 7 percent to 191.55 euros after it offered $33 per share in cash for 56.6 percent of T-Mobile. The French mobile-phone carrier said it values the remaining shares of T-Mobile at $40.50 each. T-Mobile confirmed it received a proposal from Iliad. Its parent Deutsche Telekom AG considers the offer inferior to a separate bid by Sprint Corp., a person familiar with the matter said. Deutsche Telekom advanced 2.1 percent to 12.36 euros.
Arkema SA (AKE) tumbled 25 percent to 51.73 euros, its biggest drop in at least eight years, after saying it will achieve its target of 8 billion euros in sales and a 16 percent Ebitda margin by 2017, rather than 2016 as previously forecast. The French chemicals maker posted second-quarter Ebitda of 206 million euros, missing the 234 million-euro forecast of analysts in a Bloomberg survey.
Belgacom advanced 4.8 percent to 25.58 euros after posting second-quarter revenue of 1.57 billion euros, beating the average analyst estimate of 1.48 billion euros. Belgium’s state-controlled phone company predicted 2014 adjusted Ebitda will decline 1 percent to 2 percent. It had forecast a drop of 3 percent to 4 percent.
Axa SA (CS) gained 1 percent to 17.37 euros after France’s largest insurer said first-half net income surged 22 percent to 3 billion euros, boosted by improved earnings from selling life insurance and savings products. That beat the 2.7 billion-euro average analyst projection.
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