June 13 (Bloomberg) -- European stocks were little changed as better-than-estimated U.S. retail sales data offset investor speculation that this year’s rally has overshot the outlook for company earnings.
Royal Bank of Scotland Group Plc slid 3.3 percent after saying Chief Executive Officer Stephen Hester will resign this year. Home Retail Group Plc fell the most since May 2012 as first-quarter sales at its Argos stores missed analysts’ estimates. Rhoen-Klinikum AG jumped the most since August 2012 after its shareholders abolished a voting threshold for mergers.
The Stoxx Europe 600 Index slipped 0.1 percent to 290.51 at the close of trading, paring an earlier loss of as much as 1.7 percent. The gauge has fallen 6.5 percent since Federal Reserve Chairman Ben S. Bernanke said May 22 that the central bank may pare stimulus measures if the U.S. economy improves sustainably.
“We’ve had very low volatility in this market rally and now we’re getting more volatility,” Tim Harris, who helps oversee about $25 billion as head of investments at Lloyds TSB Bank Plc, told Francine Lacqua on Bloomberg Television. “The fact that global markets have risen from the lows of last autumn by about 20 percent or so, people can get carried away with that. Clearly that’s unsettling a lot of people.”
The VStoxx Index, a measure of volatility in the Euro Stoxx 50 Index, added 1.7 percent to 22.11. It gained 3.5 percent yesterday, erasing its losses for the year.
Stocks pared losses as a Commerce Department report showed U.S. retail sales climbed 0.6 percent in May, exceeding the 0.4 percent forecast by economists in a Bloomberg survey.
The MSCI All-Country World Index advanced 20 percent from a November low through May 21, before retreating 4.7 percent through today. Japan’s Nikkei 225 entered a bear market as it plunged more than 20 percent from its May 22 high.
The volume of shares traded in companies listed on the Stoxx 600 was 9.4 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Shares on the Stoxx 600 rose to 13.5 times estimated earnings on May 17 from 9 times in September 2011. That’s the highest valuation since the end of 2009. Stocks on the index are currently trading at 12.8 times projected earnings, according to data compiled by Bloomberg.
“Investors have finally woken up to the fact that current stock valuations are not supported by fundamentals in the current low growth environment, and all the QE in the world can’t address that particular issue,” said Michael Hewson, a market strategist at CMC Markets Plc in London.
The World Bank said in a report that the global economy will expand 2.2 percent this year, less than a January forecast for 2.4 percent growth and slower than last year’s 2.3 percent. It lowered its projection for developing economies and said the euro area’s gross domestic product will fall 0.6 percent.
National benchmark indexes fell in 11 of the 18 western-European markets. The U.K.’s FTSE 100 added 0.1 percent, France’s CAC 40 rose 0.1 percent, while Germany’s DAX lost 0.6 percent.
Greek stocks gained 3.4 percent, erasing an earlier decline of as much as 2.6 percent, as Prime Minister Antonis Samaras’s office said his party will meet coalition partners on June 17. The benchmark ASE Index is still heading for a 9.1 percent weekly drop as politicians wrangled over the closure of the state-controlled broadcaster ERT.
RBS fell 3.3 percent to 315 pence after Hester said he is resigning later this year at the board’s request as the state-controlled British bank prepares for privatization.
Separately, RBS said in an e-mailed statement to staff that it will cut more jobs at its investment bank as it exits its equity derivatives and structured retail-products businesses. A person briefed on the decision said the lender will cut about 2,000 jobs.
Home Retail tumbled 9 percent to 131.1 pence after saying it expects consumer spending to remain subdued this year. Same-store sales at Argos stores rose 1.9 percent in the 13 weeks ended June 1, missing the 3 percent-gain estimated by analysts in a Bloomberg survey.
Financial-services companies declined, led by Jupiter Fund Management Plc, which dropped 1.7 percent to 307.8 pence. Aberdeen Asset Management Plc retreated 1.6 percent to 396 pence and Deutsche Boerse AG dropped 1.3 percent to 47.94 euros.
Elan Corp. fell 5.2 percent to 9.29 euros after Royalty Pharma said it may be forced to end its bid to take over the Irish drug maker. The investor in royalty streams from pharmaceuticals said today it believes that Elan shareholders will back a share repurchase progam at a meeting on June 17, requiring Royalty to withdraw its offer under an Irish Takeover Panel ruling.
Rhoen-Klinikum gained 6.7 percent to 17.73 euros as shareholders abolished a clause requiring a majority of 90 percent of capital represented at its annual meetings to approve decisions. Last year’s takeover bid from Fresenius SE failed to clear the threshold after rival Asklepios Kliniken GmbH bought a stake.
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