European stocks retreated from a five-month high as UniCredit SpA’s rights offer boosted concern that banks will need to raise more capital to weather the region’s debt crisis.
UniCredit, Italy’s largest lender, slid the most in more than two decades after setting a 43 percent price discount for the rights offer. Vestas Wind Systems A/S, the world’s biggest wind-turbine maker, slumped 19 percent after cutting its revenue and profit forecasts. Next Plc dropped 3.1 percent as the U.K.’s second-largest clothing retailer reported sales that missed analyst estimates.
The Stoxx Europe 600 Index fell 0.6 percent to 249.62 at the close in London, snapping a four-day rally. The measure rose to the highest level since Aug. 3 yesterday after a report showed that U.S. manufacturing expanded in December at the fastest pace in six months. The gauge lost 11 percent last year.
“The European debt crisis has never really abated,” said John Plassard, director at Louis Capital Markets SA in Geneva. “Even though 2011 ended relatively well, 2012 remains at risk. States will have to find 800 billion euros in the financial markets this year, so we should have a lot of market volatility ahead of us, at least during the first half.”
National benchmark indexes fell in all of Europe’s 18 western markets, except Iceland and Switzerland. France’s CAC 40 Index dropped 1.6 percent, the U.K.’s FTSE 100 Index slipped 0.6 percent and Germany’s DAX Index lost 0.9 percent.
Germany and Portugal sold bonds today, kicking off a competition for finance that may determine whether euro-area leaders can preserve the single currency.
Germany got bids for 5.14 billion euros ($6.7 billion) of 10-year bunds at an auction, more than the maximum sales target of 5 billion euros. The debt agency accepted bids for 4.06 billion euros at an average yield of 1.93 percent. Portugal’s borrowing costs fell at a sale of 1 billion euros of three-month bills.
The offers will be followed by auctions from Greece, Italy and Spain later in the month as common-currency members commence sales that may reach 262 billion euros in the first quarter and 865 billion euros in 2012, according to Deutsche Bank AG forecasts.
Spain has no plans to seek external help to fund its overhaul of the financial industry, said Carmen Martinez Castro, the deputy minister for communication. She denied a report in Expansion newspaper that the government is considering seeking loans from the European rescue facility and the International Monetary Fund as part of its plans to make banks clean up their balance sheets.
In the U.S., a Commerce Department report showed that factory orders climbed in November by the most in four months. Bookings rose 1.8 percent after a revised 0.2 percent drop the prior month. The median projection of 57 economists in a Bloomberg survey called for a 2 percent increase.
A gauge of banks was the worst performer of the 19 industry groups in the Stoxx 600.
UniCredit tumbled 14 percent to 5.42 euros, the largest decline since at least 1988, as the bank said it will sell shares at 1.943 euros apiece to raise 7.5 billion euros. The rights offer is a 43 percent discount to yesterday’s closing price, excluding the value of rights.
Banco Santander SA slid 3.9 percent to 5.79 euros as new stock sold last month to bolster capital at Spain’s biggest lender started trading in Madrid. Santander raised 1.94 billion euros in December by swapping non-listed preferred securities sold to retail customers in 2009 for newly-issued stock that can be accounted as core capital.
Banco Comercial Portugues SA and Banco Espirito Santo SA retreated 12 percent to 13.2 euro cents and 8.8 percent to 1.22 euros, respectively, in Lisbon.
Euro-area banks parked 453.2 billion euros with the European Central Bank yesterday, up from 446 billion euros the previous day. That’s the highest since the euro’s introduction in 1999.
Vestas sank 19 percent to 56.25 kroner, the lowest price since 2003, after cutting its earnings forecasts and saying it will announce a significant change to its corporate structure on Jan. 12.
Vestas now expects sales of about 6 billion euros for 2011, down from the 6.4 billion euros it forecast on Oct. 30, which itself was a reduction from 7 billion euros. Sean McLoughlin, an analyst at HSBC Holdings Plc, cut the stock to “underweight” from “neutral.”
Next dropped 3.1 percent to 2,656 pence after it reported sales that missed analyst estimates as growth in online revenue failed to offset lower store sales during a period that included the peak Christmas holiday season.
Larger rival Marks & Spencer Group Plc sank 2.6 percent to 308.8 pence. Home Retail Group Plc, the owner of Homebase outlets in the U.K., slumped 3.5 percent to 90.95 pence.
Electricite de France SA slid 5.1 percent to 18.24 euros. The utility will have to invest between 10 billion and 15 billion euros to bring safety standards at its French reactors into line with recommendations from national nuclear safety watchdog ASN, Les Echos reported, citing unidentified ASN and EDF officials.
Qiagen NV, the German biotechnology company, increased 3.2 percent to 11.21 euros as Tycho Peterson, an analyst at JPMorgan Chase & Co. raised the stock to “overweight” from “neutral.”