European stocks retreated for a second day as the Bank of Japan refrained from expanding stimulus and Treasuries sank amid speculation the Federal Reserve will trim bond purchases.
Legrand SA retreated 4.1 percent after Wendel sold the remaining 14.4 million shares it holds in the world’s largest maker of switches, plugs and lighting controls. ICAP Plc dropped 3.6 percent after Credit Suisse Group AG recommended selling the shares. BHP Billiton Ltd. led a gauge of mining companies to the lowest level since 2009 as copper dropped for a fourth day. DNO International ASA surged to a five-year high.
The Stoxx Europe 600 Index fell 1.2 percent to 291.74 at the close of trading, as Germany’s top court began hearings on the European Central Bank’s Outright Monetary Transactions program. The benchmark gauge earlier sank as much as 2.1 percent, reaching a seven-week low. The measure has retreated 6.1 percent since May 22 amid growing speculation the Fed will taper its stimulus measures as the U.S. economy strengthens.
“There is a big amount of uncertainty in the market,” said Peter Buergler, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Some of it is still connected to the fear of stimulus being reduced by the Federal Reserve, and some of it is connected to the federal court hearings in Germany. The BOJ also disappointed today. All of this is a bit too much for market participants, so they are taking a step back.”
The benchmark 10-year U.S. Treasury yield climbed as much as eight basis points to 2.29 percent, the highest level since April 2012, before retracing some gains. Investors should get used to yields being closer to 4 percent than 2 percent, former Goldman Sachs Asset Management Chairman Jim O’Neill said in a Bloomberg Television interview.
National benchmark indexes dropped in all 18 western European markets today. France’s CAC 40 lost 1.4 percent while Germany’s DAX declined 1 percent and the U.K.’s FTSE 100 fell 0.9 percent.
Greece’s ASE sank 4.7 percent for the biggest two-day slide in a year. The gauge also tumbled 4.7 percent yesterday as Greece failed to secure any bids for the Depa SA gas monopoly, marking the latest setback to a state-asset sales program that underpins 240 billion euros ($318 billion) of foreign aid.
The volume of shares changing hands in Stoxx 600 companies was 18 percent greater than the average of the last 30 days, according to data compiled by Bloomberg. The VStoxx Index, a gauge of options prices hedging against moves in the Euro Stoxx 50 Index climbed 7.2 percent to 21.01.
The BOJ today refrained from expanding its tools to rekindle inflation and stoke growth, sticking with an April pledge to increase the monetary base by 60 trillion yen ($620 billion) to 70 trillion yen a year.
“Uncertainty weighs on markets today,” said Eric Bernhardt, chief investment officer at Umblin AG in Zurich. “Investors are disappointed by the BOJ’s unchanged policy as they had hoped they would do more to solve the problems on the Japanese bond market.”
Germany’s Federal Constitutional Court began a two-day hearing to address the ECB’s OMT program, which was introduced last year as concerns peaked that the euro region would break apart. The as-yet-unused OMT foresees potentially unlimited purchases of bonds of debt-stricken countries that sign up to adjustment programs.
Legrand fell 4.1 percent to 35.59 euros. Wendel, France’s biggest publicly traded investment firm, offered the remaining shares it holds at 36 euros apiece. The company said it made a capital gain of about 370 million euros. Wendel lost 1.5 percent to 83.92 euros.
ICAP dropped 3.6 percent to 359.9 pence, its biggest decline in two months, after Credit Suisse cut the world’s largest broker of transactions between banks to underperform from neutral, meaning investors should sell the shares, citing a high level of uncertainty over volume trends.
Bank of Ireland Plc, the biggest Irish lender by assets, retreated 7 percent to 15.9 euro cents, the largest slump in almost three months. Goldman Sachs Group Inc. yesterday cut its rating on the shares to sell from neutral.
Financial stocks declined, with Man Group Plc sliding 7.1 percent to 86.25 pence, the lowest price in five months. National Bank of Greece SA lost 4.1 percent to 3.99 euros and Aberdeen Asset Management Plc fell 4.4 percent to 395.8 pence.
A gauge of European miners was the worst performer of the 19 industry groups in the Stoxx 600, with BHP Billiton and Anglo American Plc sliding 1.6 percent to 1,778.5 pence and 3.5 percent to 1,371.5 pence, respectively. Fresnillo Plc lost 3.8 percent to 1,076 pence. Copper for delivery in three months sank as much as 1.8 percent to $7,032 a metric ton in London.
Fonciere des Regions slipped 3 percent to 60.54 euros after saying it will spend close to 1 billion euros to lift its stake in Fonciere Developpement Logements to between 58.2 percent and 62.4 percent and increase its presence in Germany. Fonciere Developpement rose 6.9 percent to 18 euros.
DNO rose 10 percent to 11.30 kroner, the highest price since June 2008. The oil producer focused on the Kurdistan region of northern Iraq said it may increase its production target after a discovery at the region’s Tawke field and a successful test of another well.