European Stocks Retreat Most This Month; Cookson Sinks

European Stocks Drop Most This Month, Eurobank Rises
Eurobank Ergasias SA surged 7.7 percent after a takeover offer from National Bank of Greece SA. Photographer: Angelos Tzortzinis/Bloomberg

European stocks dropped the most this month as the World Bank cut its East Asian growth forecast and investors awaited a meeting of euro-area finance ministers for signs on how they will tackle the debt crisis.

Cookson Group Plc sank 12 percent as the world’s biggest maker of ceramic linings for metal smelters said annual results will miss its forecasts. KBC Groep NV retreated 5.2 percent as the bank’s strategy update disappointed investors. Eurobank Ergasias SA advanced 5.1 percent after a takeover offer from National Bank of Greece SA.

The Stoxx Europe 600 Index lost 1 percent to 271.43 at the close of trading, the largest decline since Sept. 28. The measure climbed 2.1 percent last week as the U.S. unemployment rate dropped to the lowest level since 2009 and stress tests bolstered confidence in Spanish banks. The gauge has advanced 11 percent in 2012 as the European Central Bank approved a plan to buy bonds of the most-indebted euro-area members and the Federal Reserve unveiled a third round of stimulus measures.

“Europe is still short of showing any indications of growth,” Jakup Petur Baerentsen and Mikkel Petersen, equity advisers at Nordea Private Bank in Copenhagen, wrote in a report. “Any good news this week will most likely have to come from Spain -- if the nation makes a formal request for a bailout from the euro zone and the International Monetary Fund.”

China Stocks

In China, the Shanghai Composite Index retreated 0.6 percent on the first day of trading after a weeklong holiday amid concern the deepening economic slowdown will hurt profits and as money-market rates rose the most in a month.

The World Bank said growth in developing East Asia, which excludes Japan and India, will probably ease to 7.2 percent this year from 8.3 percent in 2011. That is the slowest pace since 2001, according to World Bank data, and lower than a forecast in May of 7.6 percent.

The International Monetary Fund is set to lower its global outlook for this year tomorrow at an annual meeting in Tokyo where officials will tackle a slowdown triggered by Europe’s sovereign-debt crisis.

National benchmark indexes declined in all of the 18 western European markets, except Iceland. The U.K.’s FTSE 100 Index slipped 0.5 percent, Germany’s DAX lost 1.4 percent and France’s CAC 40 dropped 1.5 percent.

The number of shares changing hands in Stoxx 600 companies was 13 percent lower than the 30-day average, according to data compiled by Bloomberg.

Spain Discussion

Euro-area finance ministers meet in Luxembourg today to discuss Spain’s overhaul effort and closer banking cooperation. Tomorrow, German Chancellor Angela Merkel makes her first visit to Greece since the turmoil began in 2009. The next day, Spanish Prime Minister Mariano Rajoy travels for talks with French President Francois Hollande in Paris.

Finance ministers from all 27 nations in the European Union will meet tomorrow and EU leaders gather for a summit in Brussels on Oct. 18-19.

German industrial production declined in August as the debt crisis damped economic growth and prompted companies to scale back investment. Production fell 0.5 percent from July, when it gained 1.2 percent, the Economy Ministry in Berlin said today. Economists had forecast a drop of 0.6 percent, according to the median of 39 estimates in a Bloomberg survey.

Earnings Calendar

Alcoa Inc. unofficially starts the U.S. earnings season with the release of its third-quarter results tomorrow, the fifth anniversary of the record highs in the S&P 500 and Dow Jones Industrial Average. Earnings at companies in the S&P 500 are projected to fall 1.7 percent in the period, according to more than 11,000 analyst forecasts compiled by Bloomberg.

Cookson tumbled 12 percent to 539 pence, the largest drop since February 2009. The company said full-year results will be “materially” lower than forecast after the Engineered Ceramics division’s third-quarter performance was weaker than expected.

KBC slid 5.2 percent to 19.61 euros as Belgium’s biggest bank and insurer by market value said it plans to reduce operating expenses as a proportion of revenue to 55 percent by

2015. The shares have still more than doubled this year.

“KBC for now isn’t providing investors with a profit goal or new cost-cutting plans and the targets they do give are no reason to change our earnings estimates,” said Cor Kluis, an analyst at Rabobank International in Utrecht.

Eurobank Rallies

Eurobank advanced 5.1 percent to 1.23 euros, the highest since February, after National Bank of Greece offered to acquire its domestic rival as Greece’s debt crisis forces a wave of mergers. National Bank rallied 5.7 percent to 2.21 euros.

Imperial Tobacco Group Plc slipped 2.4 percent to 2,314 pence, the biggest drop in a month, as Nomura Holdings Inc. downgraded the maker of West and Davidoff cigarettes to reduce from neutral.

JCDecaux SA, a French outdoor advertising company, retreated 4.1 percent to 17.50 euros. Goldman Sachs Group Inc. cut its recommendation on the stock to sell from buy and added the shares to its “conviction sell” list.

Fiat SpA slid 4.2 percent to 4.29 euros, snapping a five-day rally. Il Messaggero said Italy’s market regulator Consob is investigating the size and purpose of the carmaker’s cash pile, without citing anyone.

A Consob spokesman declined to comment. Fiat said in a statement that it’s not “aware” of any investigation by Consob on alleged irregularities of its cash position.

Diamyd Medical AB surged 6.4 percent to 7.5 kronor, the biggest gain since July, after agreeing to sell its U.S. gene therapy unit. The Swedish biotechnology company said it will sell Diamyd Inc. to a Periphagen Holdings Inc., owned by the U.S. division’s management, for $1 and a 10 percent stake in Periphagen. Diamyd Medical may also receive milestone and other payments of as much as $10 million and future royalties.

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