European Stocks Decline as Data Add to Growth Concerns

European Stock Futures Drop as Asian Data Add to Growth Concern
Japan’s retail sales fell 0.8 percent in July from a year earlier, more than economists forecast, as a winding down of government subsidies for car purchases threatens to further damp consumer spending. Photographer: Tomohiro Ohsumi/Bloomberg

European stocks fell for a third day as data from Japan to Germany added to evidence that global growth is slowing while speculation cooled that Federal Reserve Chairman Ben S. Bernanke will announce more stimulus.

Daimler AG and Fiat SpA led a selloff in carmakers as Morgan Stanley said earnings in Europe are at risk. WPP Plc dropped 1.6 percent after the world’s largest advertising company cut its sales-growth forecast. Carrefour SA and Vivendi SA climbed after earnings topped analyst estimates.

The benchmark Stoxx Europe 600 Index fell 0.8 percent to

264.97 at the close of trading, extending this week’s decline to

1.1 percent. The measure has still surged 13 percent from its June 4 low amid speculation that central banks will do more to bolster growth. The gauge has advanced 1.4 percent in August.

Bernanke “is probably not going to do anything this coming Friday because the labor market has been a little bit firmer than it was,” Kevin Gardiner, head of investment strategy for Europe, Middle East and Africa at Barclays Plc’s wealth-management unit in London, said on Bloomberg Television. “The Fed on balance will conclude that they don’t need to do anything just yet.”

Reports today showed retail sales in Japan fell 0.9 percent in July from a year earlier, more than economists forecast, while confidence among manufacturers in South Korea stayed near the lowest level since the global financial crisis. Data out of Australia showed home-building approvals tumbled by the most in almost a decade.

European Economy

In Europe, German unemployment increased for a fifth straight month in August while economic confidence in the euro area fell more than economists forecast to a three-year low.

The Fed said late yesterday in its Beige Book business survey that the economy continued to expand “gradually,” damping speculation Bernanke will announce a third round of bond purchases.

Bernanke is due to deliver his annual speech on monetary policy at the central bank’s symposium in Jackson Hole, Wyoming, tomorrow. His address in 2010 preceded a second round of quantitative easing to support growth.

National benchmark indexes retreated in every western European market today, except Iceland. The U.K.’s FTSE 100 fell

0.4 percent, France’s CAC 40 lost 1 percent and Germany’s DAX dropped 1.6 percent.

Daimler led a gauge of carmakers down 4.3 percent for the biggest decline among 19 industry groups in the Stoxx 600. The German maker of luxury vehicles fell 5.5 percent to 39.06 euros, Italy’s Fiat dropped 2.1 percent to 4.33 euros and Renault SA slid 3.6 percent to 36.74 euros in Paris trading.

Auto Demand

“The latest data indicates that EU demand has fallen to levels more typical of the 1980s,” Stuart Pearson, a Morgan Stanley auto-industry analyst, wrote in a report to clients. “Any further deterioration could trigger more downgrades to our and consensus estimates.”

The brokerage cited July’s European Union seasonally adjusted annualized selling rate of 11 million units in July, the lowest level since January 2009.

WPP slid 1.6 percent to 818.5 pence after the advertising company reduced its full-year revenue-growth forecast as clients cut spending amid the European debt crisis. Sales excluding the impact of acquisitions and currency fluctuations will grow “close to 3.5 percent” this year versus an earlier forecast for 4 percent, the company said.

BHP Billiton Ltd. and Rio Tinto Group fell 3.3 percent to 1,842 pence and 2.1 percent to 2,715.5 pence respectively as iron ore sank to the lowest in almost three years in China.

Iron Ore

Benchmark iron ore at the Chinese port of Tianjin slipped

1.8 percent to $88.70 a metric ton today, according to the Steel Index Ltd.

Xstrata Plc slid 2.5 percent to 901 pence and Glencore International Plc dropped 3 percent to 357.45 pence as Qatar Holding LLC, which has a 12 percent stake in Xstrata, said it will not support a merger between the two companies.

Hays Plc tumbled 8.8 percent to 69.9 pence after the recruiter reported a 7 percent decline in full-year net fees, or payments from clients less the payroll costs of workers, for the U.K. and Ireland. The company said several markets are “likely to remain very challenging” in 2013.

Pernod-Ricard SA declined 2.4 percent to 85.66 euros after France’s largest distiller reported a 9 percent gain in so-called organic operating profit in the year to June 30, missing the median analyst estimate for a 9.6 percent increase.

The company named Daniele Ricard chairman and said it intends for Alexandre Ricard to take on the role as well as the post of chief executive officer at the end of January 2015.

Barclays Drops

Barclays Plc fell 1.5 percent to 183.5 pence after naming Antony Jenkins as its chief executive officer. Britain’s second-largest lender promoted the head of its consumer banking business as it recovers from the Libor scandal that forced out former CEO Robert Diamond.

Barclays confirmed after the close of trading yesterday that it is facing a criminal probe into fees it paid to Qatar’s sovereign wealth fund in 2008 as the bank sought to raise money to avoid a government bailout.

Carrefour rallied 6.7 percent to 16.81 euros after the world’s second-largest retailer reported first-half profit that beat analysts’ estimates. Recurring operating income declined to 769 million euros ($965 million) from 838 million euros. The median of 10 analysts’ estimates compiled by Bloomberg was 705 million euros.

Vivendi, ING

Vivendi gained 3.3 percent to 15.61 euros after Europe’s biggest media and telecommunications company reported second-quarter net income, adjusted for one-time gains and costs, of 706 million euros. That also beat analyst estimates of 652 million-euros. The company also raised its full-year forecast for the Activision Blizzard Inc. video-game unit.

ING Groep NV rallied 2.6 percent to 5.91 euros after Bank of Nova Scotia agreed to buy the Dutch company’s Canadian unit for C$3.13 billion ($3.16 billion). Canada’s third-largest lender will spend C$1.9 billion after deducting excess capital at ING Direct in the cash deal.

Eiffage SA surged 7.3 percent to 24.41 euros after France’s third-largest builder reported an 11 percent gain in first half operating income to 499 million euros as profitability at its APRR toll-road operation climbed.

Gemalto NV advanced 5 percent to 62.41 euros after the inventor of the smart chip used in bank and phone cards said it will reach its 2013 profit target a year early. Earnings from operations rose 56 percent to 115 million euros, beating the average analyst estimate of 101.3 million euros.

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