June 8 (Bloomberg) -- European stocks dropped for a sixth day, their longest losing streak since March, after Federal Reserve Chairman Ben S. Bernanke gave no hint that the central bank will unveil a new round of stimulus.
U.K. stocks extended their loses as Moody’s Investors Service said the country’s Aaa credit rating will be at risk if the government misses its debt reduction targets. UBS AG dropped 2.1 percent after a report that its investment banking unit will increase pay to retain senior employees. Kabel Deutschland Holding AG, Germany’s largest cable operator, slumped 5 percent after reporting a full-year loss.
The Stoxx Europe 600 Index slid 1.1 percent to 269.01 at the 4:30 p.m. close in London. Europe’s benchmark measure has fallen 7.6 percent since this year’s high on Feb. 17 and is trading at about 12.9 times its companies’ reported earnings, near its cheapest valuation since April 2009, according to data compiled by Bloomberg.
“It looks like this correction will continue for some time until we have better macro news out of the U.S. and more certainty on Europe’s debt problems,” said Matthias Fankhauser, a fund manager at Clariden Leu AG in Zurich, which oversees $120 billion. “What Bernanke said was quite a disappointment, and reports that Moody’s may change its view on the U.K. may put pressure on prices as some investors may trade on this information.”
Fed Chairman Bernanke said yesterday that the “uneven” and “frustratingly slow” economic recovery merits continued record monetary stimulus. He gave no indication that the central bank plans a third round of asset purchases known as quantitative easing, nicknamed “QE3” by investors.
Mortgage applications in the U.S. dropped last week as purchases fell to a one-month low. The Mortgage Bankers Association’s index decreased 0.4 percent in the period ended June 3 from the prior week, its second consecutive decline, the Washington-based group reported today.
Germany’s industrial production unexpectedly declined for the first time this year in April, led by a drop in construction output, the Economy Ministry in Berlin said today.
European stocks extended their losses after Moody’s said that the U.K. could lose its Aaa rating if the government misses its target to reduce debt as the economy slows.
Fifty-eight percent of Stoxx 600 companies that have announced earnings since April 11 have topped the average analyst estimate for per-share profit. National benchmark indexes declined in all but one of the western European markets today. Germany’s DAX Index lost 0.6 percent, while the U.K.’s FTSE 100 Index retreated 1 percent and France’s CAC 40 Index slid 0.9 percent.
UBS, Mining Companies
UBS fell 2.1 percent to 15.32 Swiss francs as the Financial Times reported that the bank plans to raise pay to help recruit and retain senior employees following departures from its investment banking unit.
BHP Billiton Plc, the world’s largest mining company, dropped 2 percent to 2,295 pence as copper and aluminum fell for the first time in four days on the London Metal Exchange. Rio Tinto Group slid 1.2 percent to 4,147 pence.
Kabel Deutschland sank 5 percent to 42.23 euros after saying its full-year net loss widened as television customers taking up Internet and phone services didn’t make up for costs from refinancing debt. Kabel Deutschland reported a net loss for the 12 months ended March 31 of 43.5 million euros ($63.4 million), compared with a loss of 40.1 million euros a year earlier. Kabel incurred 48.8 million euros in costs to refinance debt.
Nokia, Saab Slump
Nokia Oyj declined 4.2 percent to 4.29 euros after Sanford C. Bernstein & Co. reiterated its underperform rating on the stock. Shares in the Finnish mobile phone maker have plunged 45 percent this year.
Saab AB plunged 8.4 percent to 136.50 kronor, its biggest drop in more than a year, as BAE Systems Plc, Europe’s largest defense contractor, sold its remaining stake in the Swedish weapons maker for about $253 million. The sale brings an end to BAE’s 13-year investment in the maker of the Gripen fighter jet. BAE’s shares dropped 1.1 percent to 319.5 pence.
Lloyds Banking Group Plc gained 2.3 percent to 48.7 pence. The British government will change the rules of its Credit Guarantee Scheme to allow banks an early exit from the emergency support program. The changes allow banks to buy back and cancel securities issued through the arrangement, the Treasury said in a statement today.
“That the government is able to do this shows that the U.K. banking sector is clearly on the mend,” Chancellor of the Exchequer George Osborne said in the statement.
EON, the Dusseldorf, Germany-based power producer, rose 1 percent to 19.19 euros after Morgan Stanley raised its rating to “overweight” from “underweight.”
Pandora A/S jumped 4.6 percent to 171.60 kroner. The Danish maker of jewelry may buy back its own stock to stop the selloff in its shares and squeeze investors who have shorted the company, Borsen reported. Pandora has slumped 49 percent this year.
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