European stocks fell, after the Stoxx Europe 600 Index rallied the most in a month, on concern that the U.S. Federal Reserve will reduce debt purchases as the world’s biggest economy strengthens.
PSA Peugeot Citroen declined 4.2 percent following a French newspaper report that Europe’s second-biggest automaker may sell new shares to raise cash. Evraz Plc fell to a record low after Stoxx Ltd. said it will remove the commodity producer from its benchmark Stoxx 600 next month. Hennes & Mauritz AB dropped 2.5 percent as Goldman Sachs Group Inc. recommended investors sell the shares.
The Stoxx 600 retreated 1.9 percent to 302.5 at the close of trading. The equity benchmark is still heading for a 2 percent advance in May, its 12th monthly gain and the longest streak since 1997. It has rallied 8.2 percent so far this year, bolstered by central-bank monetary stimulus.
“My biggest worry is that central banks will lose their credibility, and that the Fed in particular, which has embarked on this huge quantitative-easing program, will lose the faith of investors,” Kevin Adams, who helps oversee about 69 billion pounds ($104 billion) at Henderson Global Investors in London, told Mark Barton and Anna Edwards on Bloomberg Television.
The yield on benchmark 10-year U.S. debt rose the most since September yesterday, and extended its advance to 2.23 percent earlier today, the highest rate since April 2012.
The Fed buys $85 billion of Treasury and mortgage debt a month to support the economy by putting downward pressure on interest rates. Chairman Ben S. Bernanke said on May 22 the central bank may cut the pace of buying “in the next few meetings” if economic conditions improve.
German unemployment in May rose more than four times as much as economists estimated as the euro area’s sovereign debt crisis and a long winter took their toll on Europe’s largest economy.
The number of people out of work climbed a seasonally adjusted 21,000 to 2.96 million, the Nuremberg-based Federal Labor Agency said today. That’s the fourth straight monthly gain. Economists had predicted an increase of 5,000, according to the median of 35 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, just above a two-decade low of 6.8 percent.
The International Monetary Fund lowered its forecasts for China’s growth to about 7.75 percent this year and next. In April, the IMF predicted growth of 8 percent this year and 8.2 percent in 2014.
The volume of shares changing hands on Stoxx 600-listed companies was 7 percent lower than the average of the past 30 days, data compiled by Bloomberg show.
National benchmark indexes declined in all 18 western-European markets today. The U.K.’s FTSE 100 retreated 2 percent, Germany’s DAX lost 1.7 percent and France’s CAC 40 dropped 1.9 percent.
Peugeot slid 4.2 percent to 7.05 euros. The carmaker is discussing an eventual capital increase, La Tribune reported, citing an unidentified person close to the matter. The Peugeot family has discussed what percentage of dilution would be acceptable for them, according to the newspaper.
“A capital increase is not on the agenda,” Jean-Baptiste Mounier, a spokesman for the company, said in a phone interview today.
Evraz slipped 2.7 percent to 140 pence, the lowest price since the company moved its primary listing to London in 2011. The commodity producer will be removed from the Stoxx 600 from before the start of trading on June 24, according to a statement late yesterday.
H&M slipped 2.5 percent to 232.60 kronor in Stockholm. Goldman Sachs downgraded its rating on the shares to sell from neutral, with analyst Franklin Walding saying profitability at Europe’s second-largest clothing retailer will suffer as customers shift to online shopping.
De La Rue Plc, the world’s largest banknote printer, fell 4.1 percent to 946 pence, its biggest decline in six months. Revenue dropped to 484 million pounds in the full year through March, less than the 509 million-pound profit analysts surveyed by Bloomberg had predicted.
UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, slipped 2.7 percent to 17 Swiss francs, and 2.8 percent to 27.84 francs, respectively. The fines to settle Swiss banks’ tax dispute with the U.S. could amount to between 10 billion francs ($10.4 billion) and 20 billion francs, Inside Paradeplatz website reported today, citing a person familiar with the matter.
Total SA retreated 1.7 percent to 39.40 euros, its biggest drop since April 17. Europe’s third-largest oil producer has agreed to pay $398 million to settle allegations that it made illegal payments to an Iranian official, according to an e-mailed statement from the U.S. Justice Department.