European Stocks Drop as Insurers Decline

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UBS Plans 10,000 Job Cuts, Raises Profitability Goal
UBS AG, Switzerland’s biggest bank, will cut about 10,000 jobs and retreat from capital-intensive trading businesses at the investment bank to boost profitability. Photographer: Gianluca Colla/Bloomberg

European stocks dropped, snapping a three-day advance, as Hurricane Sandy headed toward New York City, prompting the U.S. to suspend equity trading on all markets today.

A gauge of insurance companies posted the biggest decline of the 19 industry groups on the Stoxx Europe 600 Index. BT Group Plc slipped 1.5 percent after a person familiar with the matter said the telecommunications company may cut its full-year sales forecast. UBS AG rose 7.3 percent after Switzerland’s largest bank was said to have decided to cut as many as 10,000 jobs amid a plan to retreat from capital-intensive trading.

The Stoxx 600 slid 0.4 percent to 269.46 at the close. The equity benchmark has still rallied 15 percent from this year’s low on June 4 as European Central Bank policy makers agreed on an unlimited asset-purchase program and the Federal Reserve announced a third round of quantitative easing. Standard & Poor’s 500 Index futures slid 0.4 percent today.

“It’s a very dramatic step to shut it down,” Andy Lynch, a portfolio manager at Schroder Investment Management Ltd. in London, said in a Bloomberg Television interview. “I think it’s the right thing to do just because we don’t know how bad Sandy could be when it arrives. You just have to be a bit more careful about pricing because liquidity is going to be down.”

The Stoxx 600 retreated 1.3 percent last week as companies in Europe and the U.S. reported disappointing results. The volume of shares changing hands in companies listed on the Stoxx 600 today was 36 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

Hurricane Sandy

The Securities and Exchange Commission may suspend equity trading through tomorrow. The securities industry decided that the storm, which is expected to land in southern New Jersey, made it too risky for workers to travel.

Italian Prime Minister Mario Monti and his Spanish counterpart Mariano Rajoy meet in Madrid today, less than a week after Monti signaled that he would like Spain to ask for a full sovereign bailout from the European Union.

Greece’s political leaders continued to seek agreement on the labor reforms and structural changes needed to qualify for more aid under the country’s international bailout.

National benchmark indexes fell in 13 of the 18 western-European markets. The U.K.’s FTSE 100 slipped 0.2 percent and France’s CAC 40 lost 0.8 percent. Germany’s DAX slid 0.4 percent, while Greece’s ASE tumbled 6.3 percent.

Insurers Slip

A gauge of insurers dropped 1.2 percent as Munich Re and Swiss Re AG, the world’s two largest reinsurers, retreated 2 percent to 121.90 euros and 2.5 percent to 63.25 Swiss francs, respectively.

BT retreated 1.5 percent to 213.9 pence after the person, who asked not to be identified, said that European corporate customers have cut back on its services. The U.K.’s largest fixed-line phone company had said that underlying revenue growth would improve in the fiscal years ending March 2013 and 2014. BT is scheduled to release earnings on Nov. 1.

ThyssenKrupp AG dropped 3.7 percent to 17.19 euros. Germany’s biggest steelmaker asked companies to resubmit offers for its unprofitable Americas unit after deciding the original bids were too low, people familiar with the matter said.

Hargreaves Lansdown Plc, the U.K.’s largest retail broker, fell 4.2 percent to 727.5 pence. The stock was downgraded to sell from neutral at Citigroup Inc.

Italian Lenders

Italian banks declined as Banca Popolare di Milano Scarl dropped 4.4 percent to 42.5 euro cents. Intesa Sanpaolo SpA lost 2.7 percent to 1.24 euros.

Former Prime Minister Silvio Berlusconi, whose People of Liberty Party is the biggest in the national parliament, threatened to topple the government, saying its economic policies have deepened Italy’s recession. The party will “decide whether to immediately withdraw our support” for Monti, Berlusconi told reporters near Milan on Oct. 27.

National Bank of Greece SA tumbled 17 percent to 1.99 euros, its biggest plunge in a year.

Greek banks will have to hold 33 percent of their core tier 1 capital in contingent-convertible bonds and the remaining 67 percent in common equity under a recapitalization plan, Euro2day reported, without citing anyone. Eurobank Ergasias SA and Alpha Bank SA lost 15 percent to 1.06 euros and 13 percent to 1.97 euros, respectively.

Spanish Lenders

Bankia SA slid 3.5 percent to 1.10 euros. The lender whose nationalization pushed Spain toward a bailout for its banks announced a nine-month loss of 7.05 billion euros ($9.1 billion). European Union officials said the country may get its first rescue funds soon.

Telekom Austria AG declined 5.3 percent to 4.97 euros. The phone company forecast free cashflow from 2013 to 2015 of 630 million euros, Profil magazine reported, citing a confidential review of the company’s business plan. The telecommunications operator had predicted 1.7 billion euros.

Davide Campari-Milano SpA, the Milan-based distiller, dropped 3 percent to 6.22 euros. The stock was downgraded to hold from buy at Deutsche Bank AG and to neutral from outperform at Mediobanca SpA, meaning that investors should stop buying the shares.

UBS jumped 7.3 percent to 13.12 francs. The lender intends to shrink its fixed-income operations, reducing risk-weighted assets by an additional 100 billion francs ($107 billion), said a person with knowledge of the matter who requested anonymity because the plans are private.

Linde AG rose 2.5 percent to 131.95 euros. The industrial-gas maker reported third-quarter sales and profit before taxes and charges that beat analysts’ estimates.

Earnings before interest, taxes, depreciation and amortization including joint ventures advanced to 908 million euros in the quarter. Analysts surveyed by Bloomberg had predicted Ebitda of 892 million euros. Sales rose 13 percent to 3.89 billion euros, exceeding the 3.8 billion-euro average analyst estimate.

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