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European Stocks Fall on Schaeuble Comments

Citigroup Inc Chief Economist Willem Buiter
“Major central banks are likely to keep policy loose or loosen further in coming months,” wrote Willem Buiter, chief economist at Citigroup Inc., in London in a report to clients dated yesterday. Photographer: Patrick Fallon/Bloomberg

European stocks dropped for a second day as German Finance Minister Wolfgang Schaeuble damped optimism that Greece will get more time to cut its debt and as bond yields climbed in Spain.

Banco Bilbao Vizcaya Argentaria SA slid 1.8 percent as lenders retreated across Europe. Royal Ahold NV lost 3.6 percent after the retailer reported earnings that missed some analysts’ estimates. Petropavlovsk Plc tumbled 16 percent after the miner of gold in Russia reported a slump in profit.

The Stoxx Europe 600 Index retreated 0.6 percent to 267.69 at the close. The gauge earlier advanced as much as 0.6 percent on speculation central banks from the U.S. to China will further ease monetary policy to support growth. The equity benchmark has still rallied 14 percent from this year’s low on June 4.

“There are many negative factors weighing on the market, notably the uncertainty associated with the sovereign-debt crisis and a weak outlook for earnings,” Nathalie Benatia and Christopher Jeffery, strategists at BNP Paribas, wrote in a report to clients. “However, these are currently being offset by market anticipation of further policy assistance. We expect this anticipation to build over the coming weeks.”

Stocks fell as Germany’s Schaeuble said that allowing Greece more time to meet its debt obligations would not solve the country’s problems and would increase costs for creditors. He spoke on SWR2 radio.

Bilateral Meetings

German Chancellor Angela Merkel meets French President Francois Hollande today as the leaders of Europe’s two biggest economies seek common ground on Greece and the wider euro-area debt crisis. They will give statements at 7 p.m. in Berlin.

Greece’s Prime Minister, Antonis Samaras, will follow Hollande to Berlin tomorrow and travel on to Paris on Aug. 25. He used an interview published yesterday in Germany’s Bild newspaper to call for more time to carry out policy changes to address his country’s debt woes.

Stocks climbed earlier today after minutes from the Federal Open Market Committee’s July 31-Aug. 1 meeting showed many members judged that additional stimulus “would likely be warranted fairly soon” unless the pace of the U.S. economic recovery picks up.

In China, a preliminary report today indicated that manufacturing will contract at a faster pace in August, signaling the country’s economy needs more monetary and fiscal stimulus to secure a second-half rebound in growth.

Equity Volumes

The volume of shares changing hands on the Stoxx 600 was 15 percent lower than the average of the last 30 days, data compiled by Bloomberg show. National benchmark indexes declined in 15 out of 18 western-European markets. The U.K.’s FTSE 100 Index rose less than 0.1 percent, while France’s CAC 40 Index slid 0.8 percent and Germany’s DAX Index fell 1 percent.

Spain’s IBEX 35 Index dropped 0.8 percent as the nation’s benchmark bonds fell, pushing 10-year yields up by the most in almost three weeks.

BBVA retreated 1.8 percent to 5.71 euros. Bankia SA tumbled 2.1 percent to 1.33 euros.

Ahold fell 3.6 percent to 10.07 euros after the Dutch owner of Stop & Shop grocery stores reported second-quarter earnings before interest and taxes of 326 million euros ($410 million), 4.7 percent below Oddo & Cie’s estimate of 342 million euros. The underlying operating margin in the Netherlands dropped to 5.4 percent, falling short of the 6.1 percent that analysts had predicted.

Petropavlovsk Sinks

Petropavlovsk plunged 16 percent to 394 pence, its biggest slide since 2008, after reporting a 90 percent drop in first-half net income to $11 million as interest payments and depreciation costs dragged down earnings. Interest charges more than doubled to $34.6 million and the company took a depreciation charge of $106.9 million.

European Aeronautic, Defence & Space Co., the parent company of Airbus SAS, lost 2.4 percent to 29.92 euros after Qantas Airways Ltd. canceled an order for rival Boeing Co. planes worth $8.5 billion at list prices. Australia’s largest airline posted its first annual loss in at least 17 years today.

Mining companies limited the Stoxx 600’s slide. Anglo American Plc climbed 1.7 percent to 1,941.5 pence after the company reached an agreement with Codelco to end a 10-month dispute over the world’s fifth-largest copper mine, an official at the Chilean state-owned company said.

Codelco lawyers will inform a court in Santiago today that the two companies have reached an out-of-court settlement, said the official, who declined to be named citing company policy.

Antofagasta Plc climbed with copper, rising 2.9 percent to 1,152 pence. Xstrata Plc increased 1.1 percent to 926.6 pence and Vedanta Resources Plc gained 1 percent to 940.5 pence.

Heineken NV advanced 1.8 percent to 44.79 euros after Bank of America Corp. upgraded the Dutch brewer to buy from neutral. Societe Generale SA also raised its recommendation to buy, while Nomura Holdings Inc. lifted its rating to neutral.

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