European stocks declined as President Mario Draghi reiterated the European Central Bank’s pledge to keep interest rates low as he warned that it’s too soon to say the euro region is out of danger.
Arkema SA dropped 3.1 percent after cutting its full-year earnings forecast. Wm Morrison Supermarkets Plc slid the most in more than five years after saying annual profit will be at the lower end of analysts’ estimates. TGS Nopec Geophysical Co. jumped 17 percent after raising its annual revenue projection. AstraZeneca Plc rose 0.7 percent after a diabetes pill it developed with Bristol-Myers Squibb Co. won U.S. approval.
The Stoxx Europe 600 Index retreated 0.4 percent to 328.41 at the close of trading. The equity benchmark rose 17 percent in 2013 as the ECB said it would keep interest rates low for an extended period. It is trading at 13.8 times estimated earnings, compared with an October 2009 high of 15.7 times.
“Unemployment remains high, austerity measures are still sapping growth for the likes of Italy and Greece, while the French government’s inability to spur growth are all reasons to be wary of the euro area this year,” Ishaq Siddiqi, a market strategist at ETX Capital in London, wrote in a note.
The ECB’s Governing Council, convening in Frankfurt today for the first policy-setting meeting of 2014, left the main refinancing rate at 0.25 percent, a decision predicted by all 51 economists in a Bloomberg survey. Officials held the deposit rate at zero and the marginal lending rate at 0.75 percent.
“The Governing Council strongly emphasizes that it will maintain an accommodative stance of monetary policy for as long as necessary,” Draghi told reporters in Frankfurt today after the announcement.
He refused to say the fight against Europe’s debt crisis is won, even as stocks and bonds rally and countries such as Ireland and Portugal return to the debt market.
“It’s a recovery that’s gone from being based exclusively on export growth” to one that is “very gradually extending into domestic demand,” Draghi said. “But it’s still premature to declare any victory.”
The Bank of England also kept its benchmark rate at a record-low 0.5 percent today, while its bond-purchase target stayed at 375 billion pounds ($618 billion).
In the U.S., minutes from the Federal Reserve’s December meeting showed officials saw declining economic gains from its monthly bond-buying program. The Fed decided at the meeting to start reducing the size of its asset purchases by $10 billion to $75 billion starting this month.
National benchmark indexes slipped in 10 of the 18 western European markets. The U.K.’s FTSE 100 lost 0.5 percent, France’s CAC 40 fell 0.8 percent and Germany’s DAX declined 0.8 percent.
The volume of shares changing hands in companies listed on the Stoxx 600 was 49 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.
Arkema slipped 3.1 percent to 79.50 euros after lowering its forecast for 2013 earnings before interest, taxes, depreciation and amortization to around 900 million euros ($1.22 billion) from a previous estimate of 920 million euros.
The French chemical company attributed the cut to lower-than-expected fluorogas volumes in the fourth quarter and a longer-than-estimated commissioning period for new investments in Lacq, France, which affected thiochemicals activity.
Wm Morrison retreated 7.8 percent to 234.5 pence. The smallest of the U.K.’s four main grocery chains said underlying operating profit for the year will be at the lower end of a cited range of 783 million pounds to 853 million pounds after a challenging Christmas. Same-store sales excluding gasoline fell 5.6 percent in the six weeks ended Jan. 5.
Standard Chartered Plc slid 2.2 percent to 1,283.5 pence. Chief Financial Officer Richard Meddings and Steve Bertamini, head of consumer banking, will step down from the bank’s board and leave the company by June 30, according to a statement. The lender named Mike Rees as deputy chief executive officer to run the corporate and consumer-banking units, which will be combined from April 1.
TGS soared 17 percent to 172.50 kroner after Norway’s biggest surveyor of underwater oil and gas fields forecast 2013 revenue of about $882 million, compared with previous guidance of $810 million to $870 million.
AstraZeneca added 0.7 percent to 3,572.5 pence. The Food and Drug Administration said in a statement yesterday it approved dapagliflozin, a treatment for Type 2 diabetes. The pill by AstraZeneca and Bristol-Myers Squibb is the second in a new class of medicines for the disease, with Johnson & Johnson gaining clearance for its treatment in March.
Waertsilae Oyj jumped 11 percent to 37.86 euros after Rolls-Royce Holding Plc confirmed it had been in talks to acquire the maker of engines for tankers, cruise ships and navy vessels. While the talks have ended, they highlighted the interest Waertsilae is receiving from potential bidders. The Finnish company has received interest from other potential buyers in the past, people familiar with the matter said.
Genel Energy added 3.5 percent to 1,117 pence as HSBC Holdings Plc upgraded its rating on the shares to overweight, similar to a buy, from neutral. HSBC said in a note that many exploration and production companies are now trading below core-asset value.
Separately, Iraq’s Kurds will start exporting oil using a new pipeline to Turkey by the end of the month, according to the Kurdistan Regional Government’s website. DNO International ASA gained 2.1 percent to 24.89 kroner. Both Genel and DNO operate oil fields in the area.