Most European stocks fell, with the Stoxx Europe 600 Index posting its biggest weekly drop in a month, amid concern that automatic spending cuts and tax increases may push the world’s largest economy into a recession.
Credit Agricole sank 5.9 percent after posting a wider third-quarter loss than analysts had estimated. Novo Nordisk A/S rallied 7.3 percent as an advisory panel to the Food and Drug Administration backed its insulin treatment.
The Stoxx 600 slipped 0.1 percent to 270.27 at the close in London, after earlier declining as much as 1.1 percent. Four stocks fell for every three that rose. The equity benchmark retreated 1.7 percent this week. The gauge has still rallied 16 percent from this year’s low on June 4 as European Central Bank President Mario Draghi said he would do everything to protect the single currency and the Federal Reserve opted for a third round of asset purchases.
“Now that the election is over, people are realizing that actually the election as such didn’t give us any more clarification on the single biggest risk factor towards year end which is the fiscal cliff,” Witold Bahrke, a senior strategist at PFA Pension A/S in Copenhagen, where he helps oversee $55 billion. “That is pulling markets down a bit here and then we have the issue of Greece which is dragging on.”
The U.S. economy will contract if Congress fails to act, allowing more than $600 billion of tax increases and spending cuts to take effect next year, Fitch Ratings said.
“We think that will tip the U.S. back into recession,” Fitch Managing Director Ed Parker said in an interview in Istanbul yesterday. “This should be a wholly avoidable, unnecessary recession.”
A report from the Congressional Budget Office published late yesterday reiterated that failing to avoid the fiscal cliff would lead to a recession in the first half of 2013.
The Thomson Reuters/University of Michigan consumer-sentiment index climbed to 84.9 in November. That beat the average economist estimate for a figure of 82.9.
In Europe, the Bank of France said that the country’s economy may shrink in the fourth quarter as a survey of business confidence held near a two-year low last month.
Eighteen companies on the Stoxx 600 report earnings today. Of the 243 companies listed on the equity benchmark that have reported quarterly earnings this season, 130 have exceeded analysts’ projections, while 110 have missed them, according to data compiled by Bloomberg.
National benchmark indexes declined in nine of the 18 western-European markets. France’s CAC 40 rose 0.5 percent and the U.K.’s FTSE 100 slid 0.1 percent. Germany’s DAX decreased 0.6 percent.
China’s National Bureau of Statistics said industrial production rose 9.6 percent in October from a year earlier, a faster pace than the 9.4 percent median estimate in a Bloomberg survey of economists. Retail sales climbed 14.5 percent last month from a year earlier. Economists had projected a 14.4 percent gain.
Credit Agricole slumped 5.9 percent to 5.57 euros. France’s third-largest bank posted a quarterly loss of 2.85 billion euros ($3.6 billion), wider than the 1.88 billion-euro average estimate of seven analysts surveyed by Bloomberg. The lender’s decision to sell its Emporiki Bank unit to Greece’s Alpha Bank SA cut net income by 1.96 billion euros.
Deutsche Bank AG and Commerzbank AG, Germany’s two biggest lenders, fell 2.3 percent to 33.52 euros and 6.3 percent to 1.33 euros, respectively. A gauge of lenders contributed the most to the Stoxx 600’s decline.
Rheinmetall AG plunged 5.7 percent to 32.85 euros. The company, which helps make Germany’s Leopard 2 battle tank, reported third-quarter profit of 33 million euros, falling short of the average analyst estimate of 35 million euros. The company cut its full-year sales forecast to 4.8 billion euros from 4.9 billion euros.
Aegon NV, the Dutch insurer which owns Transamerica Corp., fell 3.5 percent to 4.25 euros. The stock was downgraded to neutral from buy at Bank of America Corp.’s Merrill Lynch unit.
Corio NV retreated 3.3 percent to 32.29 euros as the Netherlands’ largest publicly traded property company reported profit that missed some analysts’ estimates.
Earnings excluding changes in asset values and deferred tax declined to 196.6 million euros in the first nine months compared with 197.1 million euros a year earlier, Utrecht-based Corio said. Kai Klose, an analyst at Berenberg Bank in London, had predicted 204.7 million euros of profit on the same measure.
Telecom Italia SpA rose 3.7 percent to 69.1 euro cents after posting third-quarter profit that beat analysts’ estimates. Net income declined 13 percent to 681 million euros from a restated profit of 786 million euros a year earlier, the company said. Analysts had predicted profit of 664 million euros, according to data compiled by Bloomberg.
Novo Nordisk surged 7.3 percent to 928 kroner, its biggest rally in two years. A majority of advisers on the FDA panel said that the risks posed by the drug will probably prove insufficient to block its approval. The FDA has not told the world’s largest insulin maker when it will complete the review of the medicine, which is called Tresiba.
Denmark’s OMX Copenhagen 20 Index jumped 3.4 percent today, its biggest advance in a year. Novo accounts for 45 percent of the equity benchmark by weight.