European stocks fell from a one-week high as Fitch Ratings said the European Central Bank must do more to prevent debt crisis from spreading and a report indicated the German economy is shrinking.
Repsol YPF SA, Spain’s largest oil company, tumbled 5.7 percent after selling 61 million of its own shares. Pirelli & C. SpA, Europe’s third-largest tiremaker, lost 4.5 percent after Goodyear Tire & Rubber Co. said global tire demand is weak. Chr. Hansen Holding A/S jumped 9.8 percent as Novo A/S agreed to buy a 26 percent stake in the Danish food-ingredient company.
The Stoxx Europe 600 Index dropped 0.4 percent to 249.93 at the close of trading, after earlier climbing as much as 0.3 percent. The gauge has still advanced 2.2 percent this year as economic reports around the world added to optimism the global economy can withstand the euro area’s debt crisis.
“There is nothing different between the crisis at the end of 2011 and at the beginning of 2012,” said Lorne Baring, managing director at B Capital SA in Geneva, which oversees almost $500 million. “The rally in markets was a search for optimism away from Europe, but at some point it was going to come back onto the table.”
National benchmark indexes declined in 13 of the 18 western European markets today. Germany’s DAX and France’s CAC 40 lost 0.2 percent. The U.K.’s FTSE 100 slipped 0.5 percent.
ECB Bond Purchases
The ECB should step up its government bond purchases to combat the debt crisis, David Riley, head of Fitch’s sovereign-debt unit, said at an event in Frankfurt today.
“We need to have a credible buyer put in place and we don’t have that at the moment,” Riley said. “The ECB needs to be more actively engaged, but it can’t save the euro on its own. The crisis won’t be over until we have a broad-based economic recovery.”
Germany may be on the brink of recession after the debt crisis caused the economy to contract in the final quarter of 2011. Europe’s largest economy shrank “roughly” 0.25 percent in the fourth quarter from the prior period, the Federal Statistics Office said today.
Germany received bids for 8.97 billion euros ($11 billion) of five-year notes at an auction today, more than double the maximum target. Spain and Italy are due to sell as much as 17 billion euros in debt tomorrow.
Italian Prime Minister Mario Monti said his nation deserves recognition for the austerity measures it has adopted and should not be “feared” as a source of contagion in the region’s debt crisis. Italians have supported “very tough” measures by his government, Monti said at a press conference with German Chancellor Angela Merkel in Berlin today.
Repsol dropped 5.7 percent to 22.20 euros in Madrid, the largest decline in four months, after the company sold 5 percent of its shares to investors.
A gauge of oil and gas companies sank the most of all 19 industry groups in the Stoxx 600 as crude fell. The gauge declined 1.8 percent, the most in four weeks. Royal Dutch Shell Plc retreated 3.1 percent to 2,327.5 pence, while BG Group Plc slipped 2 percent to 1,448 pence. Statoil ASA lost 1.7 percent to 152.40 kroner and SBM Offshore NV, the world’s biggest supplier of floating oil and gas output platforms, dropped 5.6 percent to 14.87 euros.
Pirelli slid 4.5 percent to 6.63 euros after Goodyear, the largest U.S. tiremaker, said it’s experiencing weakness in global demand.
“The volume environment globally is a little bit challenging as we finish 2011 and get started on 2012,” Goodyear Chief Executive Officer Darren Wells said late yesterday.
Metro AG, Germany’s largest retailer, declined 3.3 percent to 28.36 euros after Benjamin Peters, an analyst at UBS AG, cut the stock to “sell” from “neutral.” The shares “will come under increasing pressure from earnings downgrades,” Peters wrote in a report.
Nestle SA, the world’s biggest food company, fell 1.7 percent to 53.85 Swiss francs after Bank of America Corp. downgraded the stock to “neutral” from “buy.”
Aryzta AG, a Swiss supplier of bakery products to supermarkets and restaurants, tumbled 6.8 percent to 42.8 francs after it sold 4.25 million new shares at 41 francs each. That was the largest drop since April 2009 and the worst performance in the Stoxx 600 today.
Chr. Hansen Rises
Chr. Hansen jumped 9.8 percent to 135.10 kroner, the biggest jump since the company first sold stock in June 2010, as Novo agreed to buy 35.4 million shares at 117 kroner apiece. Chr. Hansen also reported first-quarter net income that matched analyst estimates.
Alcatel-Lucent climbed 6.9 percent to 1.36 euros after Kai Korschelt, an analyst at Deutsche Bank AG, raised the stock to “buy” from “hold.”
Italian banks advanced today, with Banca Popolare di Milano Scarl jumping 9.4 percent to 29.4 euro cents. Banca Monte dei Paschi di Siena SpA increased 8.1 percent to 21.3 euro cents. UniCredit SpA gained 5.5 percent to 2.56 euros as the shares were raised to “outperform” from “underperform” by Sanford C. Bernstein & Co. analysts, who cited the stock’s “now attractive” valuation. The bank was also upgraded to “neutral” from “reduce” by WestLB AG.