Europe Stocks Drop as ECB Loans Fail to Ease Debt-Crisis Concern

European Stocks Climb For Third Day
Financial traders work at their desks underneath a display of the DAX Index curve at the Frankfurt Stock Exchange in Frankfurt, Germany, on Monday, Dec. 12, 2011. Photographer: Hannelore Foerster/Bloomberg

European stocks fell for the first time in three days as lenders sought more funds from the European Central Bank than economists had predicted, reducing optimism that the debt crisis will be contained.

SAP AG, the world’s largest maker of business-management software, tumbled the most in two years as U.S. rival Oracle Corp. reported sales and profit that missed analysts’ estimates. Italy’s UniCredit SpA led a gauge of banks lower. Konecranes Oyj slipped 3.6 percent in Helsinki after announcing a restructuring of its operations.

The Stoxx Europe 600 Index declined 0.5 percent to 237.29 at the close of trading. The benchmark measure rallied as much as 1.4 percent after the ECB agreed to provide three-year loans to euro-area banks to keep credit flowing to the economy, before erasing its advance two hours later.

“It’s another slight shrug of the shoulders,” said Richard Hunter, the London-based head of equities at Hargreaves Lansdown Plc. “The underlying story hasn’t changed with Europe’s debt crisis. The hope is that this money finds its way back into sovereign debt in the new year.”

National benchmark indexes fell in 14 of the 18 western European markets. The U.K.’s FTSE 100 slid 0.6 percent, while France’s CAC 40 retreated 0.8 percent and Germany’s DAX declined 1 percent.

ECB Loans

The Frankfurt-based ECB awarded 489 billion euros ($640 billion) in 1,134-day loans, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which it will lend at the average of its benchmark rate over the term of the loans. They start tomorrow.

The banks borrowed enough cash to refinance almost two-thirds of the debt they have maturing next year amid concern that markets will remain frozen.

“The added liquidity is being seen as just another quick shot in the arm rather than anything more meaningful,” Yusuf Heusen, a sales trader at IG Index in London, wrote in e-mailed comments. “As a result hopes of an upbeat run to Christmas seem to be waning.”

The Stoxx 600 gained 2 percent yesterday, its biggest advance since Nov. 30, as German business confidence unexpectedly rose for a second month. The measure has still lost 14 percent this year amid mounting concern that policy makers will fail to stop at least one member of the euro area from defaulting.

German Bond Sales

German Chancellor Angela Merkel’s government reduced its planned bond sales next year to 250 billion euros, compared with 270 billion euros proposed in the budget and 283 billion euros that it sold this year. The federal government will sell 170 billion euros in bonds and 80 billion euros in shorter maturities, the Frankfurt-based Federal Finance Agency said as it presented the provisional bond calendar for 2012 today.

The head of the world’s biggest bond fund said he sees a more than one-in-three chance that the euro area will break apart and trigger a financial crisis akin to the one that devastated the global economy in 2008.

“It would be the equivalent of a sudden stop” in which financial markets seized up, Mohamed El-Erian, chief executive officer of Pacific Investment Management Co. in Newport Beach, California, said. “It would be really, really messy.”

European Union leaders will hold a summit on Jan. 30 to discuss jobs and economic growth, EU President Herman Van Rompuy said.

Zero Growth

“I’m preparing this meeting intensively,” Van Rompuy said in a video message posted on the EU’s website. “It will be focused on jobs, and that’s a big challenge in a context where zero growth is expected in most of our economies. In some of them, there will even be a recession.”

SAP lost 6.1 percent to 39.92 euros, the largest decline since October 2009, and competitor Software AG fell 4.9 percent to 27.25 euros. Cap Gemini SA, a computer-services company, retreated 4.9 percent to 24.09 euros.

Oracle, the second-largest business-software maker, posted earnings before some costs in the quarter ended Nov. 30 of 54 cents a share, on revenue excluding certain items of $8.81 billion. Analysts had projected profit of 57 cents and sales of $9.23 billion, according to estimates compiled by Bloomberg.

UniCredit, Italy’s biggest bank, dropped 4.4 percent to 70.8 euro cents and France’s Societe Generale SA slid 3.4 percent to 16.63 euros. A gauge of banks in the Stoxx 600 slipped 0.7 percent.

Konecranes, Lagardere

Konecranes, the Finnish maker of container cranes, retreated 3.6 percent to 13.92 euros after saying it’s restructuring European operations and must cut 100 jobs.

Lagardere SCA rose 1.9 percent to 19.17 euros as La Tribune reported that the owner of the Europe 1 radio station has held talks with California-based private-equity firm Hellman & Friedman LLC to sell its 20 percent stake in Canal Plus for close to 1 billion euros. The newspaper cited unidentified people.

The French publisher favors a sale of the holding rather than an initial public offering, and mandated Lazard Ltd. to find a buyer, La Tribune said. Hellman & Freidman and Lagardere both declined to comment, according to La Tribune.

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