European Stocks Post Biggest Weekly Loss of 2012

European stocks posted their biggest weekly decline this year as economic data from China to the U.S. and Europe raised concerns the global economic recovery is faltering.

Randgold Resources Ltd. tumbled 13 percent after a coup toppled the government in Mali, where the company mines two-thirds of its gold. Bayerische Motoren Werke AG slipped 7 percent after an official at China’s carmakers association said vehicle sales may miss its forecast. Misys Plc surged 8.4 percent after Vista Equity Partners said it will acquire the company.

The Stoxx Europe 600 Index lost 2.5 percent to 265.65 this week, the biggest decline since December. The benchmark measure has still rallied 8.6 percent this year as the European Central bank provided loans of 1 trillion euros ($1.3 trillion) to the region’s banks and U.S. economic data surpassed estimates.

“Markets are getting too optimistic,” Gerard Lyons, chief economist at Standard Chartered Plc in London, said in an interview on Bloomberg Television. “Overall, the eurozone is in a double-dip recession. The Chinese economy is cooling. The U.S. is not having a double-dip but it’s not having a strong recovery.”

The mean daily volume of shares changing hands on the Stoxx 600 this week was 12 percent lower than the average in the last 12 months, according to data compiled by Bloomberg.

Europe, China Economy

European services and manufacturing output contracted more than forecast in March. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 48.7 from 49.3 in February, Markit Economics said on March 22.

All but one of the 19 industry groups in the Stoxx 600 retreated this week, led by a gauge of mining companies that lost 7.2 percent. An index of telecommunications companies gained 2 percent.

National benchmark indexes declined in 15 of the 18 western European markets. France’s CAC 40 Index lost 3.3 percent. Germany’s DAX Index decreased 2.3 percent and the U.K.’s FTSE 100 Index slid 1.9 percent.

In China, a preliminary measure of manufacturing fell to 48.1 this month, according to a report by HSBC Holdings Plc and Markit on March 22. That’s the lowest reading on the purchase managers’ index since November. A result below 50 indicates a contraction.

U.S. Housing, Jobs Data

In the U.S., purchases of new homes unexpectedly fell in February for a second month, a sign the recovery in the housing market may be uneven.

Sales dropped 1.6 percent to a 313,000 annual pace, the slowest since October, from a 318,000 rate in January that was weaker than previously reported, figures from the Commerce Department showed yesterday in Washington. The median estimate of 78 economists surveyed by Bloomberg News called for 325,000.

Housing starts dropped to a 698,000 annual rate last month from a revised 706,000 pace in January, according to another U.S. Commerce Department report on March 20. Building permits, a proxy for future construction, climbed to the highest level since October 2008.

Initial jobless claims fell to 348,000 in the week ended March 17, the fewest since February 2008, U.S. Labor Department figures showed on March 22. Economists in a Bloomberg survey had forecast a decline to 350,000.

Bernanke’s Testimony

Federal Reserve Chairman Ben S. Bernanke said on March 21 in a testimony to U.S. lawmakers that Europe must further strengthen its banks and that its financial and economic situation “remains difficult” even as stresses have lessened.

“Full resolution of the crisis will require a further strengthening of the European banking system,” Bernanke said in testimony to the House Committee on Oversight and Government Reform. The region’s leaders also must “increase economic growth and competitiveness and to reduce external imbalances in the troubled countries,” he said.

The index of leading indicators in the world’s largest economy rose 0.7 percent in February, following a revised 0.2 percent gain a month earlier, the Conference Board said on March 22. Economists had predicted an increase of 0.6 percent.

Goldman Sachs Group Inc. said in a report on March 21 stocks will probably begin a “steady upward trajectory” over the next few years as any declines in economic growth are already reflected in share prices.

“Given current valuations, we think it’s time to say a ‘long good-bye’ to bonds, and embrace the ‘long good buy’ for equities as we expect them to embark on an upward trend over the next few years,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs in London, wrote in a report.

U.K. Budget

In the U.K., Chancellor of the Exchequer George Osborne said on March 21 the government’s budget shortfall will be 7.6 percent of gross domestic product next year.

“Borrowing this year is set to come in at 126 billion pounds ($200 billion), 1 billion pounds lower than I forecast in the autumn,” Osborne said to lawmakers in Parliament in London as he presented his annual budget.

Randgold fell 13 percent this week after a Malian army officer said the country’s constitution had been suspended and all state institutions dissolved. Citigroup Inc. cut its recommendation on the shares to neutral from buy, and Goldman downgraded the shares to sell, saying the coup may put 70 percent of the company’s 2012 output at risk.

BMW, Daimler Drop

BMW slid 8 percent this week after an official at the China Association of Automobile Manufacturers’ said on March 20 vehicle sales in the world’s second-largest economy will probably miss its forecast for 2012.

Daimler AG lost 3.7 percent, while Volkswagen AG slipped 6.3 percent.

Adidas AG, the second-largest sporting-goods maker, declined 2.2 percent after Morgan Stanley cut its recommendation on the stock to underweight, the equivalent of sell, from equal weight.

Baloise AG, Switzerland’s third largest insurer, retreated 4.3 percent after saying on March 22 that profit dropped 86 percent last year on investment losses and a writedown on Greek sovereign debt.

Meyer Burger Technology AG, a maker of solar-panel equipment, declined 6.9 percent after the company said on March 22 that full-year profit dropped to 35.8 million francs from 97.9 million francs a year earlier.

Misys Jumps

Misys surged 8.4 percent this week after Vista Equity Partners agreed to buy the British financial software maker for 1.3 billion pounds in cash, a week after Temenos Group AG ended talks over an all-share merger.

BT Group Plc rallied 7.7 percent after saying yesterday it will pay 2 billion pounds to narrow the deficit in its pension plan, enabling it to reduce annual payment. The U.K.’s largest fixed-line operator will reassess its dividend after making the pension payment, Chief Executive Officer Ian Livingston said.

Lanxess AG, the German chemical maker spun off from Bayer AG in 2005, jumped 12 percent as Chief Executive Officer Axel Heitmann bought stock in the company yesterday following its forecast of an earnings growth this quarter.

SGL Carbon SE climbed 5.6 percent after the German maker of carbon materials reported net income jumped 40 percent in 2011 and said it will resume dividend payments.

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