European Stocks Slide as Germany Outlook Lowered

European Stocks Retreat for a Third Day as Faurecia, Elan Slide
A television cameraman films an electronic display board showing information on the IBEX 35 stock index, inside the Madrid Stock Exchange in Madrid. Photographer: Angel Navarrete/Bloomberg

European stocks retreated for a third day as Moody’s Investors Service lowered its credit outlook for Germany and a measure of manufacturing in the Richmond region of the U.S. plunged.

Elan Corp. tumbled 11 percent after the results of a study for an Alzheimer’s drug failed to show that patients’ symptoms improved. Royal KPN NV fell 7.3 percent as the company cut its dividend forecast by 61 percent after quarterly net income missed analysts’ estimates. Swatch Group AG gained 2.3 percent after posting sales and profit that increased. Man Group Plc surged 4.1 percent after saying it will double its cost cuts.

The Stoxx Europe 600 Index slipped 0.5 percent to 250.57 at the close of trading in London. The gauge slumped 2.5 percent yesterday as concern mounted that Greece will default and more Spanish regions will follow Valencia in seeking a bailout from the country’s central government.

“I would have expected the markets to recover from yesterday’s losses especially since it seems to be quieter on the Spanish front, but the Moody’s news plus the purchasing managers’ index are dragging the markets down,” said Theodore Krintas, managing director of Attica Wealth Management in Athens in a telephone interview.

Germany, the Netherlands and Luxembourg had the outlooks for their Aaa credit ratings lowered to negative by Moody’s after markets closed yesterday. The ratings company cited the risk that Greece will leave the 17-nation euro currency and the “increasing likelihood” of collective support for European countries such as Spain and Italy, according to a statement.

German PMI

German manufacturing and services output contracted in July more than economists had forecast. An index based on a survey of purchasing managers in the manufacturing industry declined to 43.3 this month from 45 in June, London-based Markit Economics said in a report. Economists had predicted a reading of 45.1. The measure of Germany’s services industries slipped to 49.7 from 49.9. Economists had projected 50.

A composite index for the euro area’s manufacturing and services industries held at 46.4 in July. That matched the median estimate of economists surveyed by Bloomberg News.

Officials from Greece’s troika of international creditors - - the European Commission, the European Central Bank and the International Monetary Fund -- arrive in Athens today amid doubts that the nation will abide by the commitments needed to obtain continued financial aid.

A U.S. report showed manufacturing in the region covered by the Federal Bank of Richmond slumped to minus 17 in July, the lowest level since 2009. The median forecast of economists surveyed by Bloomberg had called for a reading of minus 1.

Elan Plunges

Elan tumbled 11 percent to 9.85 euros, its biggest slide in two years. The company’s experimental Alzheimer’s treatment with Pfizer Inc. and Johnson & Johnson failed to improve symptoms of dementia in the first of four studies of the drug.

Royal KPN fell 7.3 percent to 6.79 euros. The Dutch phone company that is partially controlled by Carlos Slim’s America Movil SAB posted net income that decreased 24 percent to 315 million euros ($380 million) from a year earlier.

STMicroelectronics NV dropped 4.3 percent to 3.77 euros, after earlier declining as much as 7 percent. Europe’s largest chipmaker forecast third-quarter revenue will grow by about 2.5 percent, indicating sales will miss analysts’ estimates amid weaker demand for the company’s products.

ProSiebenSat.1 Media AG, a German broadcaster controlled by KKR & Co. and Permira Advisers LLP, lost 3 percent to 16.30 euros, sliding for a third day. The stock was downgraded to equal weight from overweight by Barclays Plc, meaning that investors should not buy more of the company’s shares.

Spanish builder Actividades de Construccion & Servicios SA plunged 5 percent to 10.84 euros, dropping for a tenth day. Acciona SA tumbled 9.3 percent to 30.47 euros.

Gas Natural

Endesa SA fell 5.8 percent to 11.63 euros. A gauge of utilities stocks posted the worst performance of the 19 industry groups on the Stoxx 600.

Swatch rose 2.3 percent to 369.90 Swiss francs. The biggest maker of Swiss watches reported first-half profit that beat analysts’ estimates as sales of Omega and Longines timepieces to Chinese consumers increased. Net income rose to 720 million francs ($723 million) from 575 million francs a year earlier, the Biel, Switzerland-based company said.

Man Group rallied 4.1 percent to 72 pence. The world’s biggest publicly traded hedge fund manager also said it plans to sell fewer so-called guaranteed products that generate high commissions for employees.

Provident Financial Plc jumped 11 percent to 1,297 pence, its highest price in more than 11 years. The U.K.’s biggest subprime lender said first-half net income jumped 20 percent from a year earlier after the number of customers taking out high-interest credit cards increased.

Software AG

Software AG rallied 11 percent to 25.98 euros after the company raised the forecast for its Enterprise Transaction Systems in 2012. Germany’s second-biggest software maker also posted a 46 percent increase in revenue from its Business Process Excellence licenses in the second quarter.

SAP AG climbed 3.5 percent to 50.77 euros. The largest maker of business-management software is beating rivals to contracts as companies limit their spending amid slowing economies, Co-Chief Executive Officer Jim Hagemann Snabe said.

Croda International Plc gained 6.1 percent to 2,364 pence, its lowest price since at least 1989. The maker of cosmetic ingredients reported first-half pretax profit before one-off items of 67.5 million pounds ($105 million). That beat the average estimate of 66.2 million pounds in a survey of analysts by Bloomberg.

France Television

Societe Television Francaise 1 advanced 3.7 percent to 6.56 euros. The stock was raised to overweight from equal weight at Barclays Plc, meaning that investors should buy the shares.

National benchmark indexes in 15 of the 18 western-European markets retreated today. The U.K.’s FTSE 100 Index slid 0.6 percent, while Germany’s DAX Index declined 0.5 percent. France’s CAC 40 Index dropped 0.9 percent. Spain’s IBEX 35 Index slumped 3.6 percent.

The volume of shares changing hands in companies listed on the Stoxx 600 was 22 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

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