European stocks declined for a fourth day as Japanese machinery orders tumbled the most in a decade and Spanish bonds dropped before euro-area finance ministers meet in Brussels.
Metro AG, Germany’s biggest retailer, sank to a three-year low as Chief Executive Officer Olaf Koch said restrained spending will have a “significant impact” on business. Telecommunications companies rallied as Nomura Holdings Inc. upgraded the industry.
The Stoxx Europe 600 Index slipped 0.4 percent to 253.46 at the close of trading as the yield on Spain’s 10-year bonds climbed to more than 7 percent. The equity gauge has risen for five straight weeks, the longest winning streak since January, as the region’s policy makers eased repayment rules for Spanish banks and relaxed conditions for possible aid to Italy.
“The main themes on the market remain the debt crisis and where southern European rates are heading,” said Michael Borre, the chief equity analyst at Nordea Private Banking in Copenhagen. “That’s why we continue to expect markets to stay nervous and volatile this week.”
Euro-area finance ministers meet in Brussels today to follow up on the crisis-fighting measures adopted by leaders of the 17 euro countries last month. The Stoxx 600 briefly erased losses after European Central Bank President Mario Draghi said the central bank will do what is needed and is open to “all ideas” to help tackle the crisis, as long as it does not breach its mandate to keep prices stable.
National benchmark indexes fell in 14 of the 18 western-European markets. Germany’s DAX and France’s CAC 40 declined 0.4 percent each. The U.K.’s FTSE 100 lost 0.6 percent.
The yield on Spain’s benchmark 10-year bond rose 11 basis points to 7.06 percent at 5:53 p.m. in Madrid. That’s above the 7 percent threshold that prompted full bailouts of Greece, Ireland and Portugal.
Bankia SA, the third-biggest Spanish lender, dropped 1.8 percent to 83.4 euro cents to lead declines among Iberian banks. Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA fell 1.7 percent to 4.82 euros and 1.4 percent to 5.11 euros, respectively.
Japanese machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said, the biggest drop since 2001. Economists surveyed by Bloomberg had expected a 2.6 percent decline.
In the U.S., Alcoa Inc., the biggest American aluminum producer, is scheduled to unofficially start the second-quarter earnings season when it releases results after the close of trading today.
Analyst estimates compiled by Bloomberg project a 1.8 percent decline in profits for Standard & Poor’s 500 Index companies in the April-June period, which would mark the first year-over-year decrease since 2009. Analysts still predict profit growth of 7.2 percent for the full year.
“Excitement about the imminent U.S. earnings season is in short supply,” said Ben Critchley, a sales trader at IG Index in London. “Markets expect it to reveal how damaging the euro-zone crisis has been to the global economy as a whole.”
Metro lost 6.3 percent to 20.43 euros, the lowest since March 2009. The owner of Cash & Carry outlets, Kaufhof department stores and the Saturn electronics chain sees a “small increase at best” in German consumption this year, CEO Koch said in an interview with Bild am Sonntag published yesterday. Ruediger Stahlschmidt, a spokesman for the company, declined to comment further on the report.
A gauge of telecommunications shares had the biggest gain of 19 industry groups in the Stoxx 600, rising 0.5 percent, as Nomura upgraded the sector to neutral from underweight. Telecom Italia SpA rallied 3.9 percent to 75.35 euro cents and France Telecom SA advanced 0.9 percent to 10.27 euros.
Vestas Wind Systems A/S slid 2.4 percent to 27.85 kroner in Copenhagen. The wind-turbine maker needs to sell stock to raise capital for its “expensive” restructuring, newspaper Jyllands-Posten reported, citing Michael Friis Jorgensen, an analyst from Alm Brand A/S.
Vestas earlier jumped as much as 6.9 percent as Caixin reported that Ming Yang Wind Power Group Ltd. may buy the company. The shares erased those gains as Ming Yang said it’s not in acquisition talks with Vestas.
JJB Sports Plc plunged 25 percent to 7.38 pence after saying sales fell “materially short of expectations,” as this year’s European soccer championships did not provide the same stimulus to revenue as previous tournaments.
Michael Page International Plc dropped 3.8 percent to 350.9 pence. The U.K. recruitment company said gross profit declined 6.6 percent in the second quarter from the same period a year earlier and forecast the third quarter will be “challenging.” Rival Hays Plc fell 2.7 percent to 70.9 pence.
BAE Systems Plc, the biggest British arms company, rose 1.4 percent to 296.9 pence as defense equipment minister Peter Luff said the U.K. plans to make spending announcements on military equipment in the coming year, ruling out further cuts to programs.