European Stocks Drop Amid Banking-Union Disagreement

European Stock-Index Futures Retreat Amid Euro-Crisis Stalemate
Copper ore travels along a conveyor belt at the processing plant of Rio Tinto Group's Northparkes copper and gold underground block cave mine in Parkes, New South Wales, Australia. Photographer: Carla Gottgens/Bloomberg

European stocks dropped as Germany and France disagreed on when to introduce a banking union for the euro area and a report added to concern about the strength of China’s economy.

Anglo American Plc slid 2.6 percent, contributing the most to a decline by a gauge of mining companies. CGGVeritas tumbled

5.3 percent after agreeing to buy Fugro NV’s seismic division for 1.2 billion euros ($1.6 billion). TNT Express NV lost 2.6 percent as the company’s chief executive officer resigned.

The Stoxx Europe 600 Index fell 0.4 percent to 274.7 at the close, its largest drop since Sept. 18. Metal producers, banks and construction companies declined. The equity benchmark has still surged 17 percent from this year’s low on June 4 as the European Central Bank and the Federal Reserve approved unlimited bond-buying programs.

“The weekend euro-zone news flow pointed to a difficult Monday for risk assets,” Ian Williams, a strategist at Peel Hunt LLP in London wrote in a note to clients today. The market is “looking for clarity. With the bulk of anticipated central-bank action now having taken place, the focus moves firmly back to economic activity.”

German Chancellor Angela Merkel rejected French President Francois Hollande’s appeal to activate oversight of the banking union “the earlier, the better.” The deadlock over regulation may delay into next year a key building block in resolving the single currency’s debt crisis.

Speaking at a meeting on Sept. 22 near Ludwigsburg, Germany, Merkel said that the proposed banking union “has to be thorough, the quality has to be good and then we’ll see how long it takes.”

Chinese Manufacturing

In China, manufacturers and retailers are less optimistic about sales than they were three months ago and are cutting jobs, according to the findings of a survey by New York-based researcher CBB International LLC.

Previous economic reports showed that manufacturing, trade and retail sales slowed in the third quarter. That pointed to a seventh straight deceleration in quarterly growth and potentially the weakest annual expansion for the world’s second-largest economy in 22 years.

National benchmark indexes fell in every western-European market except Denmark and Iceland. Germany’s DAX slipped 0.5 percent, while the U.K.’s FTSE 100 retreated 0.2 percent. France’s CAC 40 dropped 1 percent.

Business Confidence

Stocks extended their retreat today after German business confidence unexpectedly fell for a fifth-straight month in September to the lowest reading since February 2010.

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 101.4 from 102.3 in August. Economists predicted an increase to 102.5.

Anglo American sank 2.6 percent to 1,887.5 pence as base metals declined in London and after Bank of America Corp. and Citigroup Inc. both lowered their recommendations for the shares to neutral from buy.

Rio Tinto Group dropped 2 percent to 2,980 pence after Citigroup downgraded the world’s third-largest mining company to neutral from buy. Antofagasta Plc slid 1.3 percent to 1,260 pence and Kazakhmys Plc retreated 2.1 percent to 714 pence.

CGGVeritas slumped 5.3 percent to 24.44 euros after the world’s largest surveyor of oilfields agreed to buy Fugro’s seismic division to benefit from crude producers’ increased spending on offshore exploration. CGG will finance the deal through debt and a share sale. The company said that it will complete the transaction by the end of the year.

Fugro climbed 2.1 percent to 53.48 euros.

TNT Express

TNT Express dropped 2.6 percent to 8.21 euros after the delivery company’s CEO Marie-Christine Lombard resigned. Chief Financial Officer Bernard Bot will temporarily replace her.

TNT said Lombard’s resignation to “pursue an external career opportunity” would not affect United Parcel Service Inc.’s attempt to buy the Netherlands-based company.

Credit Agricole SA lost 2.4 percent to 5.71 euros after the Wall Street Journal reported that the French lender will probably need to inject as much as 700 million euros into Emporiki Bank SA before selling the business.

National Bank of Greece SA, EFG Eurobank Ergasias SA and Alpha Bank AE said that they submitted revised offers for Emporiki earlier this month.

Qinetiq Group Plc rallied 6.5 percent to 182.9 pence for the biggest advance on the Stoxx 600. The defense technology company said its first-half performance was stronger than it had forecast. The business, which was sold by the U.K. government in 2001, also said that it will at least meet estimates for the full year.

Fiat SpA climbed 2.5 percent to 4.60 euros after Chief Executive Officer Sergio Marchionne confirmed the carmaker’s 2012 financial targets. He spoke at an employers’ lobby association meeting in Turin today.

The volume of shares changing hands on the Stoxx 600 was 13 percent less than the average of the last 30 days, according to data compiled by Bloomberg.

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