European stocks were little changed, with the Stoxx Europe 600 Index posting its first weekly drop since June, as German Chancellor Angela Merkel said Greece must stick to its commitments to stay in the euro area, and a news report said the European Central Bank is considering setting yield band targets.
A gauge of mining companies was among the main losers, with Rio Tinto Group slumping 1.6 percent and BHP Billiton Ltd. sliding 1.4 percent. NKT Holding A/S tumbled 9 percent after the maker of cables and industrial vacuum cleaners reported second-quarter sales that missed estimates. Nokia Oyj rallied 4.2 percent.
The Stoxx 600 added 0.1 percent to 268.0 in London after earlier falling as much as 0.6 percent. European stocks posted a 1.8 percent drop this week, snapping 11 weeks of gains. 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 preserve the euro and said the bank may intervene in the secondary market to reduce bond yields.
“The two issues which concern investors the most right now -- a Greek exit from the euro zone and an ECB-backed bond-buying program for Spain and Italy -- are a persistent source of concern,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, wrote in e-mailed comments. “September is a crunch month when sentiment is likely to be extremely volatile. There are already signs that investors will be disappointed.”
The Stoxx 600 declined yesterday 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.
Merkel said that Germany is ready to help the Greek government as it takes the necessary steps to resolve its economic woes, rebuffing European critics who advocate Greece’s exit from the euro.
“I am deeply convinced that the new government under the leadership of Prime Minister Samaras will do what it takes to solve the problem in Greece,” Merkel said at a joint press conference with Samaras in Berlin today. “I want Greece to stay in the euro zone and that’s what I’m working for.”
Stocks rebounded in the last half hour of trading after Reuters reported the ECB is considering setting yield band targets under a new bond-buying program. Reuters cited unnamed central bank people.
In the U.S., Federal Reserve Chairman Ben S. Bernanke said there’s “scope for further action” by the central back to spur economic growth.
Demand for U.S. capital goods such as machinery and communications gear dropped in July by the most in eight months, indicating companies are pulling back on investment.
Bookings for non-military capital equipment excluding planes slumped 3.4 percent, a Commerce Department report showed today in Washington. Total orders for goods meant to last at least three years jumped 4.2 percent.
National benchmark indexes fell in nine of the 18 western European markets. France’s CAC added less than 0.1 percent and the U.K.’s FTSE 100 was unchanged. Germany’s DAX rose 0.3 percent.
A gauge of European mining shares was the second-worst performer of the 19 industry groups in the Stoxx 600 as Reserve Bank of Australia Governor Glenn Stevens said today the country’s commodity boom will peak within the next year or two.
Rio Tinto and BHP Billiton retreated 1.6 percent to 2,910 pence and 1.4 percent to 1,933 pence, respectively. Anglo American Plc dropped 2.9 percent to 1,885 pence.
Eurasian Natural Resources Corp. decreased 3.6 percent to 338.9 pence after ING Groep NV said the producer of metals in Kazakhstan may need to consider selling some assets or raise capital via new equity, citing its rapidly escalating debt burden as a key concern.
NKT Holding tumbled 9 percent to 191.10 kroner after the maker of cables and industrial vacuum cleaners reported second-quarter sales of 3.9 billion kroner ($667 million), missing analysts’ estimates of 4.15 billion kroner. Earnings before interest, taxes, depreciation and amortization were 229 million kroner, below the 300 million-kroner analyst projection.
Ashmore Group Plc retreated 4.3 percent to 331.5 pence after Haley Tam, an analyst at Citigroup Inc. cut the U.K. fund manager to sell from neutral.
Nokia jumped 4.2 percent to 2.49 euros, for an eighth consecutive day of gains.
Anheuser-Busch InBev NV, the world’s biggest brewer, rose 1.9 percent to 65.40 euros, following a gauge of European food and beverage shares higher. Chief Strategy Officer Jo Van Biesbroeck bought 200,000 shares for 13.1 million euros on Aug. 17, according to regulatory filings.
Danone SA, the world’s largest yogurt maker, gained 1.4 percent to 51.01 euros, while Marine Harvest ASA, the world’s biggest salmon farmer, climbed 3.9 percent to 4.51 kroner as investors bought the stock in anticipation of increased fish prices.