European stocks fell for a second week, for the biggest loss since June, amid concern any military action by the U.S. against Syria may escalate into a larger conflict in the Middle East and push up oil prices.
ThromboGenics NV plunged 25 percent after its sales forecast missed analysts’ estimates. Serco Group Plc tumbled 12 percent as some of its staff members came under investigation for suspected fraudulent behavior. Vodafone Group Plc jumped 7.6 percent after confirming talks with Verizon Communications Inc. to sell its 45 percent stake in Verizon Wireless.
The Stoxx Europe 600 Index declined 2.4 percent to 297.32 this past week, ending August with only the second monthly loss since May 2012. The equity benchmark has still rallied 7.9 percent from this year’s low on June 24 as the European Central Bank and the Bank of England pledged to keep interest rates low.
“Syria was a key factor in driving markets lower this week as the threat of a military intervention and the threat of a spike in oil prices tend to be a bad combination for equity investors,” said Andreas Nigg, head of equity and commodity strategy at Vontobel Asset Management in Zurich. “We had a nice summer rally and we are entering the weakest seasonal period from an equity perspective.”
The VStoxx Index, a gauge of expected volatility in euro-area stocks based on options prices, posted the second-biggest weekly increase since November 2011, jumping 32 percent. National benchmark indexes dropped in all of the 18 western European markets. Germany’s DAX declined 3.7 percent. The U.K.’s FTSE 100 slipped 1.2 percent. France’s CAC 40 lost 3.3 percent.
U.S. Secretary of State John Kerry said the U.S. will hold Syria accountable for using chemical weapons against its own people. The attack near Damascus on Aug. 21 killed as many as 1,300 people, according to opposition groups.
Oil jumped to a two-year high on Aug. 28 amid concern the Syrian conflict may threaten supplies from the Middle East. The U.S., which has sought to rally international cooperation in acting against Syria, was left with only France as a potential ally after the U.K. House of Commons voted against Britain’s participation in a military campaign.
In the U.S., the Federal Reserve holds a policy meeting on Sept. 17-18 to decide whether to slow the pace of its bond-purchase program. Fed Chairman Ben S. Bernanke said in May and June that the central bank may consider tapering if the employment outlook improved substantially and the economy grows as forecast. He also said the Fed stands ready to continue or shrink stimulus based on data.
The issue of America’s statutory debt ceiling resurfaced with the Treasury Department saying the U.S. will exhaust its borrowing limit of $16.699 trillion in mid-October. Congressional Republicans and President Barack Obama’s administration are gearing up for battles starting in early September over federal spending and borrowing, with the risk of a government shutdown and a downgrade of the U.S. credit rating hanging over the debates.
ThromboGenics plunged 25 percent, for its biggest weekly slump since it sold shares to the public in 2006. The Belgian eye-drug developer forecast that sales of its only approved product won’t increase in the second half of the year. The projection missed analysts’ estimates.
Second-half sales of Jetrea, the drug approved in the U.S. last year to treat vitreomacular adhesion, will be at the same level as first-half sales of 12.5 million euros ($17 million), the company said.
Serco Group tumbled 12 percent, the most since 2002. The U.K. government said police are investigating suspected fraud by Serco staff in a contract for prisoner escorting and custodial services. The Ministry of Justice gave the company three months to improve governance and said the company may be excluded from all government contracts if it failed to do so.
Zurich Insurance Group AG slid 5.1 percent after its chief financial officer, Pierre Wauthier, killed himself and Chairman Josef Ackermann resigned. Switzerland’s biggest insurer said Wauthier had left behind a letter mentioning Ackermann, while refusing to give further details.
Bwin.Party Digital Entertainment Plc retreated 17 percent after the gambling company said it expects full-year revenue to fall between 14 percent and 17 percent from last year.
Vodafone advanced 7.6 percent after confirming that it is in talks with Verizon Communications to sell its 45 percent stake in Verizon Wireless. The deal may be valued at $130 billion, said two people familiar with the matter. That would make it the biggest transaction since Vodafone’s acquisition of Mannesmann AG in 2000.
Petrofac Ltd. gained 9.5 percent after the oil-services provider reported first-half profit that beat analysts’ estimates. The company also raised its dividend.
Ocado Group Plc rose 14 percent. The U.K.’s largest online-focused grocer will be added to the Stoxx 600 on Sept. 23, Stoxx Ltd. said.