European stocks retreated from a three-week high as commodity producers declined and companies from Deutsche Lufthansa AG to RSA Insurance Group Plc cut their payouts to shareholders.
BHP Billiton Ltd. contributed the most to the Stoxx Europe 600 Index’s slide. Lufthansa posted its biggest drop in 15 months after saying it will suspend its dividend for the first time since 2010 to preserve cash. RSA Insurance tumbled the most in almost nine years after announcing a dividend cut. Lafarge jumped the most in five months after the world’s largest cement maker said sales increased in Asia and Latin America.
The Stoxx 600 declined 0.3 percent to 289.07 at the close of trading. The gauge rallied to its highest level since Jan. 29 yesterday. The equity benchmark has still risen 3.4 percent this year after U.S. lawmakers agreed on a compromise federal budget.
“We have to keep in mind that political risks are mounting in Europe as well as in the U.S.,” said Witold Bahrke, who helps oversee $55 billion as senior strategist at PFA Pension A/S in Copenhagen. “On the one hand, central banks are forcing investors into equities. On the other hand the rally is maturing and risk appetite is getting stretched.”
The volume of shares changing hands in companies listed on the Stoxx 600 was 15 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
The Federal Reserve will issue the minutes of its Jan. 29-30 policy meeting at 2 p.m. in Washington.
The U.S. central bank said on Jan. 30 that it will continue to buy $85 billion of Treasuries and mortgage-backed securities a month to support growth. Minutes of the Fed’s Dec. 11-12 meeting showed members had split between wanting to finish bond purchases in the middle or at the end of the year.
A Commerce Department report showed that new housing starts in the U.S. dropped in January from a four-year high.
National benchmark indexes gained in 10 of the 18 western-European markets. Germany’s DAX declined 0.3 percent, while France’s CAC 40 slid 0.7 percent. The U.K.’s FTSE 100 climbed 0.3 percent.
BHP Billiton slipped 2.4 percent to 2,183.5 pence after the world’s biggest mining company reported a 58 percent decline in first-half profit and appointed Andrew Mackenzie as its new chief executive officer. Mackenzie, who takes over on May 10, was head of its copper unit.
A gauge of commodity companies slid 2.8 percent, the worst performer among the 19 industry groups in the Stoxx 600. Rio Tinto Group, the world’s second-largest mining company, lost 1.8 percent to 3,646.5 pence.
Lufthansa dropped 6.2 percent to 15 euros after Europe’s biggest airline by sales canceled its dividend for 2012. The company made a payout of 25 euro cents a share for 2011.
RSA Insurance tumbled 14 percent to 117 pence, its largest slide since March 2004, as the U.K.’s biggest general insurer by market value lowered its dividend for the second half of 2012. Floods in the U.K. and earthquakes in Italy eroded RSA’s underwriting profit by 60 million pounds ($92 million) and 30 million pounds, respectively, in 2012.
Royal KPN NV plunged 9.7 percent to 2.92 euros. The Dutch telecommunications company dropped to an 11-year low after America Movil SAB agreed not to increase its stake beyond 30 percent. The Mexican mobile-phone operator controlled by billionaire Carlos Slim also said it will take part in KPN’s 4 billion-euro capital-raising plan in return for nominating two people to the company’s supervisory board.
Maurel & Prom
Etablissements Maurel & Prom slid 5.4 percent to 14.14 euros after the French oil explorer said it has not received an expression of interest valuing its shares at 19 euros apiece. The Sunday Telegraph reported on Feb. 17 that Indonesia-based Pertamina may make an offer for the company. The newspaper cited unidentified people.
Swedish Match AB tumbled 6.8 percent to 206.80 kronor. The company forecast that operating profit from its snuff and snus products will drop in 2013. It also reported fourth-quarter profit of 787 million kronor ($125 million), beating the average analyst estimate of 689.5 million kronor.
Lafarge jumped 5.5 percent to 49.27 euros. The world’s biggest cement maker said fourth-quarter earnings before interest, taxes, depreciation and amortization rose to 856 million euros ($1.1 billion), beating the average analyst estimate of 821.6 million euros.
Credit Agricole SA rose 3.9 percent to 7.61 euros after saying it plans to reduce costs by 650 million euros by 2016. France’s third-largest bank said in a web presentation it expects to cut costs by 650 million euros by 2016 through information-technology resources, real estate and procurement.
Rexam Plc rallied 5.3 percent to 502 pence after the maker of drink cans reported profit before taxes of 418 million pounds in 2012, exceeding the 377 million-pound mean estimate in a Bloomberg survey.