European Stocks Decline; Alstom, Erste Drop

European Stocks Drop Following Yesterday’s Rally
A visitor passes a red stock index curve displayed on an electronic screen at the Hellenic stock exchange in Athens. Photographer: Chris Ratcliffe/Bloomberg

European stocks declined, after yesterday rallying the most in more than three weeks, as companies from Alstom SA to Erste Group Bank AG sold shares.

Alstom sank 4.9 percent after selling a 350 million-euro ($453 million) holding. Erste Group slipped 2.8 percent after the lender’s largest shareholder sold a 235 million-euro stake. PostNL NV added 4.4 percent after the postal company said it will increase rates next year.

The Stoxx Europe 600 Index slipped 0.3 percent to 271.62 at the close after earlier rising as much as 0.4 percent and falling as much as 0.7 percent. The equity benchmark has still rallied 16 percent from this year’s low on June 4 as central banks in the U.S. and the euro area turned to bond purchases to stimulate growth and ensure the transmission of record-low interest rates.

“It’s a difficult period for investors to place bets,” said David Hussey, who helps oversee $218 billion as head of European equities at Manulife Asset Management in London. “The global economy is going to recover, it’s just going to take a while. In the long term, we are bullish on equities, but that is really long term. In the interim, we will continue to have this horrible trading-range type mentality.”

The Stoxx 600 and the Euro Stoxx 50 Index, the gauge of the largest companies in the euro area, have both failed to post back-to-back gains or losses for the last 10 days.

European stocks yesterday rallied the most since Sept. 6 after stress tests bolstered confidence in Spain’s banking system and a report showed U.S. manufacturing unexpectedly expanded last month. The Stoxx 600 fell 2.7 percent last week amid concern the U.S. Federal Reserve’s bond-buying program will fail to encourage growth.

National Markets

National benchmark indexes fell in 10 of the 18 western-European markets. France’s CAC 40 slipped 0.6 percent. The U.K.’s FTSE 100 retreated 0.2 percent, while Germany’s DAX lost

0.3 percent. The volume of shares changing hands in Stoxx 600- listed companies was 3 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

Alstom retreated 4.9 percent to 26.85 euros after the company sold stock at 26.65 euros apiece, a 5.6 percent discount to yesterday’s close, to finance a Russian acquisition that it announced in 2009. The French engineering company had said it wouldn’t consider such a move.

Erste Group fell 2.8 percent to 17.18 euros after Erste Stiftung, the Austrian bank’s largest shareholder, sold a 235 million-euro stake, reducing its holding to 20.2 percent. The 14 million shares were sold at 16.80 euros apiece.

Brenntag, Lloyds

Brenntag AG declined 1.7 percent to 98.83 euros after Goldman Sachs Group Inc. sold 496,212 shares in the chemical distributor at 99 euros apiece.

Lloyds Banking Group Plc retreated 2.4 percent to 39.03 pence and Royal Bank of Scotland Group Plc dropped 3.3 percent to 257.5 pence after UBS AG lowered its recommendation on both lenders to hold from buy, citing concern the banks may have to raise more capital.

PostNL climbed 4.4 percent to 2.81 euros, rising for the first time in nine days, after the Dutch mail-service company said it will increase postage stamp rates in 2013 because its volume of deliveries has fallen.

Swiss Re Ltd. added 2.7 percent to 63 Swiss francs after Societe Generale SA upgraded the world’s second-biggest reinsurer to buy from hold. The brokerage said that the company may pay about $2.5 billion in special dividends through 2014.

Finmeccanica SpA gained 3.2 percent to 4.01 euros after Il Sole 24 Ore reported that Economic Development Minister Corrado Passera has approved Fondo Strategico Italiano SpA’s offer for the company’s Ansaldo Energia unit. The newspaper did not say where it got the information.

Babcock, Bumi

Babcock International Group Plc climbed 2.4 percent to 945 pence after saying it remained confident of meeting its full-year targets. The engineering-services company also said its businesses continued to benefit from buoyant civil and military markets in the second quarter.

Bumi Plc surged 6.5 percent to 159.5 pence after PT Bumi Resources said it will raise cash to accelerate the repayment of its debt. The company, founded by Nathaniel Rothschild and owner of 29 percent of the Jakarta-based miner, said on Sept. 24 that it began investigating “potential financial and other irregularities” and hired lawyers to look into a $637 million writedown of development funds and exploration assets.

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