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May 15 (Bloomberg) -- European stocks dropped for a second day, pushing the Stoxx Europe 600 Index to its lowest level since December, as Greece called a new election after the country’s politicians failed to form a government.

Banks posted the biggest contribution to the Stoxx 600’s decline. Julius Baer Group Ltd. plunged 6.1 percent, its biggest slide in almost eight months, as revenue from assets under management fell in the first four months of the year.

The Stoxx 600 retreated 0.7 percent to 245.76 at the close in London, extending its drop from this year’s peak on March 16 to 9.8 percent. The gauge swung between gains and losses at least nine times earlier today. The Stoxx 600 slid to its lowest level since Dec. 30.

“Equities look cheap, but we all know why,” Didier Saint-Georges, a member of the investment committee at Carmignac Gestion, which oversees about 50 billion euros ($64 billion), said at a presentation in London today. “Valuations are not necessarily pointing to any clear direction. For Europe, you just don’t need growth, but also very profound adjustments both fiscal and external, and that won’t happen quickly.”

National benchmark indexes fell in every western-European market except Norway and Ireland. The U.K.’s FTSE 100 lost 0.5 percent and France’s CAC 40 lost 0.6 percent. Germany’s DAX retreated 0.8 percent. Greece’s ASE Index plunged 3.6 percent to its lowest level since November 1992.

Greece will hold its new vote as early as next month as polls showed that the anti-austerity Syriza group could win the ballot. The failure to form a government committed to austerity has reignited concern that the country will leave the euro area.

Euro-Area Economy

Greece will repay 435 million euros of foreign-law bonds falling due today which weren’t tendered in the country’s debt restructuring, the Athens-based Finance Ministry said in an e-mailed statement . The repayment won’t prejudice future decisions on other untendered bonds, the ministry said.

Germany’s Finance Minister Wolfgang Schaeuble said Greece must elect a government that sticks to the terms of its international bailout if it wants to stay in the euro.

“If Greece -- and this is the will of the great majority - - wants to stay in the euro then they have to accept the conditions,” Schaeuble told reporters at a meeting of European Union finance ministers in Brussels. “Otherwise it isn’t possible. No responsible candidate can hide that from the electorate.”

The Stoxx 600 lost 1.8 percent yesterday as Greece moved closer to a possible exit from the euro area, European industrial output slipped in March and German Chancellor Angela Merkel’s party lost a state election.

Euro-Area Economy

Gross domestic product in the 17-nation euro area stagnated in the first quarter compared with the final three months of 2011, according to the European Union’s statistics office in Luxembourg. The median forecast of economists surveyed by Bloomberg had called for a 0.2 percent contraction. Germany’s economy expanded 0.5 percent, compared with the 0.1 percent median estimate of economists in a separate survey.

The volume of shares changing hands on the Stoxx 600 was 5.1 percent higher than the average over the last 30 days, according to data compiled by Bloomberg.

In the U.S., a Commerce Department report showed that retail sales increased 0.1 percent in April. That matched the median forecast by 80 economists surveyed by Bloomberg. Sales advanced 0.8 percent in March.

UniCredit, Intesa Sanpaolo

UniCredit SpA and Intesa Sanpaolo SpA, the biggest Italian lenders, declined 5.5 percent to 2.53 euros and 5.5 percent to 97.65 euro cents, respectively, after Moody’s Investors Service cut the credit ratings of 26 of the nation’s lenders, citing weakened earnings and the domestic economic outlook.

Julius Baer slumped 6.1 percent to 32.11 Swiss francs after the Swiss wealth manager established in 1890 reported that its gross margin, a measure of profitability, was “slightly below” 100 basis points over the period, compared with 105 basis points in 2011. A basis point is one-hundredth of a percentage point.

FLSmidth & Co. A/S tumbled 8.4 percent to 319 kroner after the biggest maker of cement kilns posted net income and revenue that missed analysts’ estimates. The Copenhagen-based company reported first-quarter profit of 241 million kroner ($41.4 million) and sales of 5.15 billion kroner. Analysts surveyed by Bloomberg had predicted profit of 338 million kroner and sales of 5.55 billion kroner.

Vivendi, Iliad Rise

Vivendi SA added 2 percent to 12.68 euros after reporting profit that exceeded analysts’ estimates. First-quarter net income, excluding one-off gains or losses and some costs, fell 13 percent to 823 million euros. That beat the 765 million-euro average of analyst estimates compiled by Bloomberg.

Vivendi reiterated its forecast adjusted net income of more than 2.5 billion euros this year, a decline of as much as 15 percent from 2011. It said in March that its earnings slump will last through 2013 as SFR cuts prices to prevent customers from defecting to France’s fourth mobile-phone operator, Iliad SA.

Iliad gained 3.6 percent to 102.20 euros. The company, founded by entrepreneur Xavier Niel, posted first-quarter sales that jumped 29 percent to 655.7 million euros.

To contact the reporter on this story: Peter Levring in Copenhagen at

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomber

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