European Stocks Fall on Japan Trade Deficit

European Stock Futures Retreat Before Euro-Crisis Consultations
Futures on the Euro Stoxx 50 Index, a benchmark for the euro region, decreased 0.8 percent to 2,470 at 7:09 a.m. in London. Photographer: Ralph Orlowski/Bloomberg

European stocks slid the most in almost three weeks as Japan reported a wider-than-expected trade deficit and investors awaited the outcome of meetings between the leaders of countries in the euro area.

BHP Billiton Ltd. slid 1.7 percent after the world’s biggest mining company put $68 billion of projects on hold. Heineken NV, which last week increased its offer to gain control of Asia Pacific Breweries Ltd., lost 1.1 percent after posting first-half earnings that missed analysts’ estimates because of higher costs. Man Group Plc sank 4.4 percent as the hedge-fund manager reported a drop in assets at its flagship fund.

The Stoxx Europe 600 Index declined 1.2 percent to 269.27 at the close, its biggest retreat since Aug. 2. The equity benchmark has still rallied 15 percent from this year’s low on June 4 as European Central Bank President Mario Draghi pledged to protect the single currency.

“Everybody’s waiting for the September 6 ECB meeting to see if policy makers will deliver on what has so far been a verbal intervention,” said Morten Kongshaug, the chief equity strategist at Danske Bank A/S. “Markets have overreacted to those prospects and we could see a selloff before then. Economic data are far from good as the numbers from Japan showed this morning.”

The volume of shares changing hands on the Stoxx 600 was

9.8 percent lower than the average of the last 30 days, data compiled by Bloomberg show. National benchmark indexes declined in every western-European market. The U.K.’s FTSE 100 Index fell

1.4 percent. France’s CAC 40 Index lost 1.5 percent and Germany’s DAX Index slid 1 percent.

Stocks’ Rally

The Stoxx 600 rose to its highest level since July 2011 last week, its 11th consecutive week of gains, as optimism mounted that the currency zone’s central bankers and politicians would act to protect lenders and as U.S. consumer sentiment and leading economic indicators exceeded forecasts.

Japan had a trade deficit of 517.4 billion yen ($6.5 billion) in July as the euro area’s sovereign-debt crisis and a slowdown in China dragged down exports, a report from the country’s Finance Ministry showed. That compared with a 60.3 billion yen surplus in June and a 270 billion yen forecast deficit in a Bloomberg News survey of 28 analysts.

Federal Reserve Bank of Chicago President Charles Evans described weakening global trade as “awful.” The U.S. central bank will consider both the economy and financial stability before deciding on further monetary easing, Evans said to reporters today in Beijing.

Juncker Meeting

In Athens, Luxembourg’s Prime Minister, Jean-Claude Juncker, who also heads the group of euro-area finance ministers, meets with Greek Prime Minister Antonis Samaras to hear a request for a two-year extension to the country’s fiscal-adjustment program today. French President Francois Hollande and German Chancellor Angela Merkel meet tomorrow.

If Samaras shows a willingness to meet the main targets of his country’s second bailout, the other governments in the currency zone may agree to minor concessions, a senior lawmaker with Merkel’s government said yesterday.

In the U.S., a report showed sales of existing properties rose to a 4.47 million annual pace in July from a 4.37 million pace in June. Economists surveyed by Bloomberg News had predicted an increase to 4.51 million. A release tomorrow will show purchases of new houses climbed to a 365,000 rate last month from a 350,000 pace in June, according to the median forecast of economists surveyed by Bloomberg.

A Commerce Department report on Aug. 24 may show that durable-goods orders increased 2.5 percent, the most this year, economists projected.

Miners Drop

BHP Billiton slid 1.7 percent to 1,947 pence after saying that it will not approve any further spending on major projects this fiscal year. The commodity producer also posted net income of $5.5 billion for the six months ended June 30, compared with $13.1 billion a year earlier, according to a calculation from Bloomberg that the Melbourne-based company confirmed.

Rio Tinto Group, the world’s third-biggest mining company, declined 2.7 percent to 2,979.5 pence, as a gauge of miners dropped the most of the 19 industry groups on the Stoxx 600.

Anglo American Plc slid 3.7 percent to 1,910 pence after JPMorgan Chase & Co. downgraded the shares to underweight from neutral, meaning that investors should sell the holdings. The brokerage said that Anglo American was the most expensive large mining company when valued on its earnings.

Heineken Retreats

Heineken slipped 1.1 percent to 44 euros after the world’s third-largest brewer said costs to produce its beer will climb 8 percent this year, rather than the 6 percent increase that it had forecast.

The company also posted earnings before interest and taxes, excluding some items, of 1.27 billion euros ($1.6 billion). That compared with the 1.31 billion-euro average estimate for profit on that basis in a Bloomberg survey of 10 analysts. The figure represents a so-called organic decrease of 5.5 percent, compared with the median estimate of 9 analysts for a 0.5 percent increase.

Man declined 4.4 percent to 76.8 pence after the fund manager said the net asset value of its Man AHL Diversified fund fell 1.4 percent last week.

Vestas Wind Systems A/S slumped 6.4 percent to 31.77 kroner after the Aarhus, Denmark-based wind-turbine maker said it will cut another 1,400 jobs to lower costs by more than 250 million euros. The company also reiterated full-year targets for revenue of 6.5 billion euros to 8 billion euros and a margin before interest and taxes of zero to 4 percent.

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