Most European Stocks Drop as China Trade Misses Forecasts

Most European stocks dropped, even as the Stoxx Europe 600 Index completed its 10th successive weekly gain, as worse-than-estimated Chinese trade data added to evidence the global economy is slowing.

Bankia SA led retreating shares after a 128 percent rally in the past 11 days. Bank of Ireland Plc tumbled 3.1 percent as its first-half loss more than doubled. Bunzl Plc fell the most in a year after UBS AG recommended selling the stock. ThyssenKrupp AG climbed 5.1 percent as Germany’s biggest steelmaker reported its first profit in four quarters.

The Stoxx 600 fell 0.1 percent to 269.88 at the close in London, as more than three stocks on the gauge slid for every two that rose. The benchmark gauge still gained 1.6 percent this week, its 10th week of increases, amid better-than-estimated company earnings.

“The Chinese numbers were disappointing and will have to be digested by the market first, which is why we’re seeing some pressure on stocks,” said Peter Braendle, who helps manage $55 billion at Swisscanto Asset Management AG in Zurich. “We may simply be seeing a healthy breather after the strong gains we’ve had in the past few days.”

The volume of shares changing hands in companies listed on the Stoxx 600 was 35 percent lower than the average of the last 30 days, data compiled by Bloomberg show.

National benchmark indexes dropped in 14 of the 18 western-European markets. The U.K.’s FTSE 100 Index fell less than 0.1 percent, while Germany’s DAX slipped 0.3 percent. France’s CAC 40 lost 0.6 percent.

China’s Trade

China’s export growth collapsed and imports and new yuan loans trailed estimates in July, reports today showed.

Outbound shipments increased 1 percent from a year earlier and imports rose 4.7 percent, the customs bureau said. The growth in July exports compared with the 8 percent median estimate in a Bloomberg News survey and 11.3 percent in June. Analysts estimated a 7 percent gain in imports after a 6.3 percent increase in June.

New local-currency lending was 540.1 billion yuan ($85 billion), lower than all 30 estimates in a Bloomberg News survey, after 919.8 billion yuan in June.

“Whilst markets have recently been rallying on bad news -- in the expectation that it will lead to further stimulus from the central banks -- the deterioration in the fundamentals is becoming a bit harder to ignore,” said Jonathan Sudaria, a trader at Capital Spreads in London. “Traders may be disappointed if their thirst for stimulus isn’t satiated as soon as they expect.”

Bankia Bailout

Bankia plunged 20 percent to 1.21 euros, snapping an 11-day rally. Spain’s bank-bailout fund FROB reiterated that shareholders in the Bankia Group will have to share the costs of cleaning up the lender.

Bank of Ireland, the nation’s largest lender, lost 3.1 percent to 9.5 euro cents, a two-week low. The first-half pretax loss widened to 1.26 billion euros ($1.55 billion) from 556 million euros in the year-earlier period. That was worse than the 899 million-euro median estimate of three analysts surveyed by Bloomberg.

Bunzl, which provides supply services for grocery and health-care companies, fell 4.6 percent 1,113 pence, the biggest slump since Aug. 8 last year, after UBS AG cut the stock to sell from neutral.

Hannover Earnings

Hannover Re dropped 2.3 percent to 48.38 euros. The world’s fourth-biggest reinsurer said second-quarter profit declined 13 percent because of unrealized losses on investments. Net income fell to 144 million euros from 166.2 million euros a year earlier. That missed the 170.5 million-euro average estimate of 15 analysts surveyed by Bloomberg.

Metso Oyj and Outotec Oyj retreated 2.1 percent to 30.78 euros and 1.7 percent to 38.75 euros, respectively. JPMorgan Chase & Co. cut Metso to underweight, the equivalent of sell, from neutral and lowered Outotec to neutral, the equivalent of hold, from overweight.

Aspo Oyj closed 0.2 percent lower at 5.99 euros, after sliding as much as 6.5 percent, as the Finnish logistics company said it expects full-year operating profit to drop “significantly” from 2011 and earnings per share to decline “slightly.”

Fugro NV, the world’s biggest surveyor of deepwater oilfields, lost 2.9 percent to 50.86 euros. First-half net income of 115 million euros missed the average 120 million-euro analyst estimate.

ThyssenKrupp, Barclays

ThyssenKrupp advanced 5.1 percent to 16.45 euros, the most in seven months. Net income from continuing operations increased 16 percent to 238 million euros in the fiscal third quarter from a year earlier. Adjusted earnings before interest and taxes were 122 million euros, topping analysts’ projection for 83.4 million euros.

Barclays Plc, the British bank fined a record for interest-rate manipulation, climbed 2.5 percent to 183.4 pence after it named former Bank of England executive director David Walker as chairman, its first move to replace leaders ousted in wake of the Libor scandal.

Schibsted ASA gained 8.1 percent to 201.10 kroner, leading advancing shares on the Stoxx 600, as its second-quarter pretax profit of 442 million kroner ($75 million) beat analysts’ estimate for 441 million kroner. Earnings before interest, taxes, depreciation and amortization were 596 million kroner, compared with a forecast for 586.4 million kroner.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE