European Stocks Sink to Two-Year Low on Deepening Debt Concern

European Stocks Rebound From Two-Day Tumble
Whitbread Plc, which own Costa Coffee, climbed 7.3 percent as the U.K.’s largest hotel and restaurant operator said sales growth accelerated. Photographer: Jason Alden/Bloomberg

European stocks declined for a third day, reaching the lowest in more than two years, as deepening concern that the region’s debt crisis will derail the recovery overshadowed better-than-estimated growth in U.S. services.

UniCredit SpA and Societe Generale SA fell more than 4 percent as a gauge of banks slid to the lowest level since March 2009. Caja de Ahorros del Mediterraneo, the Spanish savings bank taken over by the Bank of Spain, slumped 8.4 percent after posting a loss. Bayer AG plunged 7.5 percent after U.S. regulators asked for more data on the blood thinner Xarelto.

The Stoxx Europe 600 Index slid 0.7 percent to 221.98 at the 4:30 p.m. close in London after earlier climbing as much as 1 percent. The gauge has tumbled 7.1 percent over the past three days, falling to the lowest close since July 2009.

“There’s still significant uncertainty regarding what will happen with the European debt problem,” said Pierre Mouton, a fund manager at Notz Stucki & Cie. in Geneva, who helps oversee $7.5 billion. “The market remains afraid. The debt crisis and worries about the economy are weighing on the market.”

National benchmarks indexes fell in 14 of the 18 western European markets. Germany’s DAX Index slid 1 percent and France’s CAC 40 lost 1.1 percent, while the U.K.’s FTSE 100 climbed 1.1 percent. The Swiss Market Index surged 4.4 percent after the central bank set a ceiling on the franc’s exchange rate for the first time in more than three decades.

Jobs Data

The Stoxx 600 plunged 2.4 percent on Sept. 2 after a worse-than-forecast U.S. jobs report added to concern that America’s economic recovery is stalling. The gauge lost 10 percent last month amid concern that global economic growth is slowing as Europe’s sovereign-debt crisis spreads.

Factory orders in Germany, Europe’s largest economy, fell more than economists forecast in July, led by a drop in export demand as the global economy cooled, a report today showed.

The Institute for Supply Management’s index of U.S. non-manufacturing businesses increased to 53.3 in August from 52.7 a month earlier. The measure was projected to drop to 51, according to the median forecast in a Bloomberg News survey. A reading above 50 signals expansion.

HSBC Holdings Plc cut its forecast today for global economic growth for the next two years and said the efficacy of any further stimulus measures will be limited. The world economy will grow 2.6 percent this year and 2.8 percent in 2012, compared with estimates published in June of 3 percent and 3.4 percent respectively, London-based economists including Stephen King and Madhur Jha said.

Goldman Forecast

Goldman Sachs Group Inc. reduced its three-month forecast for the Stoxx 600 by 6 percent to 210, citing weaker economic data and political uncertainty. That’s 5.4 percent below today’s closing level.

UniCredit, Italy’s largest lender, slid 4.5 percent to 79.5 euro cents. France’s Societe Generale lost 6.5 percent to 18.93 euros, the lowest since March 2009. EFG Eurobank Ergasias SA sank 9.4 percent to 1.16 euros, leading Greek banks lower. A gauge of bank shares on the Stoxx 600 has fallen 12 percent in the past three days.

Caja de Ahorros slumped 8.4 percent to 1.74 euros after posting a 1.14 billion-euro ($1.6 billion) first-half loss, highlighting the deterioration of a lender the government wants to sell.

Bayer AG plunged 7.5 percent to 37.75 euros, the lowest in two years, after U.S. regulators said more data is needed to satisfy concerns the blood thinner Xarelto will prevent stroke in people with the most common abnormal heart rhythm.

Infineon, Sandvik

Infineon Technologies AG, Europe’s second-biggest chipmaker, slipped 2.3 percent to 5.15 euros as Fairchild Semiconductor International Inc. lowered its third-quarter revenue forecast.

Sandvik AB, the world’s biggest maker of metal-cutting tools, fell 2.5 percent to 77.55 kronor. The stock was cut to “underweight” from “equal weight” at Morgan Stanley.

Swatch Group AG led a rally in Swiss equities as the central bank’s ceiling on the franc’s exchange rate eased concern that the currency’s strength will hurt the earnings of exporters. The world’s biggest maker of watches rose 4.3 percent to 346.3 francs as the Swiss currency fell as much as 8.7 percent against the euro. Transocean Ltd., the largest offshore oil driller, soared 12 percent to 44.5 francs.

Whitbread Plc climbed 7.3 percent to 1,563 pence as the U.K.’s largest hotel and restaurant operator said sales growth accelerated.

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