European stocks dropped the most this year as Saipem SpA plunged and a report showed that the U.S. economy unexpectedly contracted in the fourth quarter.
Saipem plummeted 34 percent after cutting its earnings forecasts for 2012 and 2013. Swedbank AB jumped the most in 32 months after the lender raised its dividend payout ratio to 75 percent of profit after net income more than quadrupled in the fourth quarter. Nordea Bank AB rose 3.2 percent after reporting quarterly profit that beat analysts’ estimates.
The Stoxx Europe 600 Index lost 0.6 percent to 288.63 in London, falling from its highest level since Feb. 18, 2011. The gauge has still jumped 3.2 percent in January, heading for its longest streak of monthly gains since 1997.
“Major risks for European equities may occur from political uncertainty,” Tobias Britsch, who helps manage about 25.6 billion euros ($35 billion) as European equities asset manager at Meriten Investment Management GmbH, said in a phone interview from Dusseldorf, Germany. “The political issues are unpredictable and this is increasing with elections in Europe coming up.”
Italy holds a parliamentary election on Feb. 24-25. Pier Luigi Bersani’s Democratic Party will win the most votes, according to opinion polls.
The U.S economy shrank 0.1 percent at an annual rate in the fourth quarter, figures from the Commerce Department showed today. The median estimate of 83 economists surveyed by Bloomberg had called for the world’s largest economy to expand 1.1 percent. Gross domestic product increased 3.1 percent in the three months through September.
The Federal Reserve will probably renew its commitment to continue buying assets into next year at a policy decision today, according to a Bloomberg News survey of 44 economists. The Federal Open Market Committee concludes its two-day meeting and publishes its statement at 2:15 p.m. New York time.
National benchmark indexes retreated in 14 of the 18 western-European markets. The U.K.’s FTSE 100 slipped 0.3 percent, while France’s CAC 40 and Germany’s DAX both declined 0.5 percent.
Saipem plunged 34 percent to 20.01 euros, its biggest slide since at least Dec. 1988. The oil and gas contractor lowered its forecast for earnings before interest and taxes in 2012 by 6 percent to about 1.5 billion euros. Ebit will fall to about 750 million euros in 2013, the company said. Italy’s FTSE MIB sank 3.4 percent, its biggest drop since Aug. 2.
A gauge of European oil and gas companies fell the most in 12 weeks as Eni SpA, which owns a 43 percent stake in Saipem, dropped 4.7 percent to 18.40 euros. Rival energy explorers Technip SA and Petrofac Ltd. tumbled 7.1 percent to 77.47 euros and 7 percent to 1,615 pence, respectively. Subsea 7 SA slid 5.4 percent to 132.30 kroner, its biggest drop in eight months.
Roche Holding AG retreated 1.4 percent to 198.60 Swiss francs. The world’s biggest maker of cancer drugs posted earnings per share excluding some items of 13.62 francs for last year, falling short of the 13.67-franc average analyst estimate in a Bloomberg survey.
The Basel, Switzerland-based drugmaker raised its dividend to 7.35 francs a share, less than the Bloomberg Dividend Forecast of 7.40 francs. The shares climbed to their highest price in almost five years on Jan. 24.
Imperial Tobacco Group Plc sank 4.3 percent to 2,361 pence after saying profit will decline in the first half of this year. Europe’s second-biggest tobacco company also reported a smaller gain in fiscal first-quarter revenue than analysts had estimated. British American Tobacco Plc, Europe’s largest, dropped 0.8 percent to 3,275.50 pence.
Swedbank, the second-best capitalized major lender in the European Union, surged 10 percent to 149 kronor, its biggest jump since May 2010. The bank proposed a dividend of 9.90 kronor a share, compared with 5.30 kronor a year earlier. Net income rose to 4.34 billion kronor ($683 million) in the fourth quarter, from 965 million kronor a year earlier, the lender said. That beat the average projection of 3.54 billion-krona in a Bloomberg survey.
Nordea rose 3.2 percent to 68.45 kronor after Scandinavia’s largest lender said profit increased 7 percent in the fourth quarter. Net income climbed to 840 million euros from 785 million euros a year earlier, the lender said. That beat the average analyst estimate for profit of 765 million euros.
Luxottica Group SpA added 2.3 percent to 34.36 euros, its highest price since its initial public offering on Italy’s stock market in December 2000. The owner of the Oakley and Ray-Ban sunglasses brands said sales rose 14 percent in 2012 to 7.09 billion euros.
The volume of shares changing hands in Stoxx 600 companies today was 9.8 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.