European stocks dropped, paring a weekly gain, as Royal Bank of Scotland Group Plc and Renault SA fell, while investors weighed the U.S. manufacturing data to gauge the outlook for the Federal Reserve’s stimulus program.
RBS slid 7.5 percent after predicting a “substantial” annual loss because of writedowns. Renault declined 5 percent after its partner Nissan Motor Co. cut its full-year profit forecast. Vodafone Group Plc rose to the highest price in 12 1/2 years after people familiar with the matter said AT&T Inc. is exploring a takeover of the company.
The Stoxx 600 lost 0.3 percent to 321.5 points. The gauge climbed 0.4 percent this week, yesterday closing at its highest level since May 2008, as the Federal Reserve refrained from paring bond buying and as companies from BNP Paribas SA to Volkswagen AG reported better-than-forecast profit.
“With markets at new highs, we need a breather,” Karim Bertoni, a Geneva-based European equities analyst at De Pury Pictet Turrettini & Co., which manages about $3.3 billion, said by telephone. “We could see the markets go slightly down for a couple of weeks before going up again. Recent data indicate we’re seeing a subdued improvement in the global economy but not a huge rebound.”
National benchmark indexes fell in 11 of the 16 western European markets open today. The U.K.’s FTSE 100 added less than 0.1 percent. Germany’s DAX lost 0.3 percent. France’s CAC 40 slid 0.6 percent. Stock markets in Austria and Luxembourg were closed, with Sweden open for half a day, for All Saints Day.
In the U.S., the Institute for Supply Management’s manufacturing index rose to 56.4 last month from September’s 56.2. Readings above 50 indicate expansion. Economists had projected a drop to 55. The report follows data from China, where the official manufacturing gauge rose more than forecast to an 18-month high. A Chinese PMI from HSBC Holdings Plc and Markit Economics also topped projections.
Investors are watching data to gauge the health of the U.S. economy after the Federal Reserve this week said it needs to see more evidence of sustained improvement before slowing the pace of its monthly bond purchases.
RBS fell 7.5 percent to 340 pence, its biggest retreat since June 2012. Britain’s biggest publicly owned lender said it will write down as much as 4.5 billion pounds ($7.2 billion) in the fourth quarter after transferring 38.3 billion pounds of its riskiest loans to an internal bad bank. RBS also posted a net loss of 828 million pounds in the third quarter.
Renault dropped 5 percent to 61.29 euros. Nissan lowered its full-year profit forecast by 15 percent. Japan’s second-biggest carmaker expects to post net income of 355 billion yen ($3.6 billion) in the year ending March, compared with its previous estimate of 420 billion yen and the average projection of 440.3 billion yen in a Bloomberg survey.
Meggitt Plc tumbled 11 percent to 509 pence, its largest decline since September 2001. The world’s biggest provider of wheels and brakes for military aircraft cut its full-year sales forecast, citing short-term production problems at a unit. Meggitt predicted sales growth in low single digits, compared with a previous forecast for a mid-single-digit increase.
Vodafone advanced 3.6 percent to 232.5 pence, its highest price since May 1, 2001. People familiar with the matter said that AT&T plans to create the world’s largest telecommunications operator by acquiring Europe’s biggest mobile carrier next year. AT&T executives are discussing internally which of Vodafone’s assets the U.S. company could retain if a deal happened, the people said.
OC Oerlikon Corp. climbed 3.5 percent to 13.15 Swiss francs. The largest textile-machinery maker appointed Brice Koch as chief executive officer, seven months after Michael Buscher quit. Koch previously led ABB Ltd.’s power-systems division.
Pandora A/S gained 2.9 percent to 269.60 kroner, its highest price since March 2011. The Danish jeweler raised its full-year sales forecast to 8.6 billion kroner ($1.56 billion), from a previous projection of 8 billion kroner. Pandora expects the margin on earnings before interest, taxes, depreciation and amortization will be about 30 percent, compared with a previous prediction of about 27 percent.
ASM International NV, which makes machines used to turn silicon wafers into chips, rose 3.9 percent to 25.26 euros after reporting third-quarter sales of 116.4 million euros ($158 million). The surpassed the 110.4 million euros forecast on average by analysts in a Bloomberg survey.