European Stocks Decline Most in Two Weeks; KPN Retreats

Credit Suisse Group AG's headquarters in Zurich
Credit Suisse will book a charge of 275 million Swiss francs ($312 million) after taxes in the fourth quarter of 2013, resulting in a restatement of results to a net loss of 8 million francs for the period, the company said after European markets closed on March 22. Photographer: Gianluca Colla/Bloomberg

European stocks fell, after posting their biggest weekly advance in more than a month, as world leaders pledged further measures against Russia, and manufacturing gauges slipped in China, Germany and the U.S.

Royal KPN NV lost 4.2 percent after Citigroup Inc. downgraded the stock. Stada Arzneimittel AG slumped 15 percent after cutting its 2014 forecast. CEZ AS, the largest Czech utility, climbed 5.1 percent after the nation’s finance minister said the government is seeking a 100 percent dividend payout.

The Stoxx Europe 600 Index fell 1.1 percent to 324.39 at the close of trading in London. That’s its biggest drop since March 7. The benchmark gauge advanced 1.8 percent last week as Russian President Vladimir Putin said he won’t seek territory beyond Crimea.

“As investors are nervous amid the Crimea crisis and apparent problems in the Chinese economy, stronger numbers would have been important for a continued positive development of the stock markets,” said Martin Schlatter, a fund manager at Swiss Rock Asset Management in Zurich, which oversees about $1 billion. “A confrontation between the West and Russia is absolutely unwanted.”

U.S. President Barack Obama and the other Group of Seven heads of government hold a meeting in The Hague tonight to decide what steps to take next in the Ukraine crisis amid growing concern that Russia is building up its forces on the border with its neighbor after annexing the Crimean peninsula. Ukraine said today it deployed more troops to the frontier.

Chinese Manufacturing

In China, a preliminary report showed manufacturing weakened for a fifth straight month in March. The Purchasing Manager’s Index from HSBC Holdings Plc and Markit Economics dropped to 48.1, compared with the 48.7 median estimate of 22 analysts surveyed by Bloomberg News. The number compares with February’s final 48.5 figure. Numbers above 50 signal expansion.

Separate preliminary data showed that a gauge of manufacturing and services in the euro area declined to 53.2 in March, matching forecasts, from 53.3 the previous month. Manufacturing fell to 53.8 from 54.8 in Germany. In the U.S., it slipped to 55.5 from 57.1, compared with the drop to 56.5 that economists had forecast.

The volume of shares changing hands in Stoxx 600 companies was 11 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

National benchmark indexes retreated in all 18 western-European markets today, except Iceland. France’s CAC 40 fell 1.4 percent and Germany’s DAX lost 1.7 percent. The U.K.’s FTSE 100 slipped 0.6 percent.

KPN Drops

KPN fell 4.2 percent to 2.55 euros. Citigroup lowered the Dutch telecommunications operator to neutral from buy, meaning it no longer recommends investors purchase the stock. The brokerage said the risk of a failure of the O2/E-Plus deal is rising, while adding that it will still probably close.

Stada Arzneimittel slumped 15 percent, the most since September 2011, to 29.40 euros. The maker of generic drugs said it no longer expects to achieve its forecast for 2014, citing the strong devaluation of the Russian ruble and the Ukrainian hryvnia amid the Crimean crisis. Russia accounted for 19 percent of the company’s sales in 2012, while Ukraine contributed another 1.7 percent.

Centrica Plc slid 1.9 percent to 331.5 pence, and SSE Plc dropped 2.3 percent to 1,475 pence. Industry regulator Ofgem said it will publish a report this month on the state of competition in the energy market. Its assessment may lead to a referral of Britain’s “Big Six” suppliers to the Competition Markets Authority and a possible breakup of their operations, the Sunday Times reported.

Credit Suisse

Credit Suisse Group AG dropped 1.5 percent to 27.13 Swiss francs. Switzerland’s second-largest lender agreed to pay $885 million to settle lawsuits by the Federal Housing Finance Agency over mortgages sold to Fannie Mae and Freddie Mac. The bank will book a charge of 275 million francs ($312 million) after taxes in the fourth quarter of 2013, resulting in a restatement of results to a net loss of 8 million francs for the period, the company said.

International Consolidated Airlines Group SA fell 2.3 percent to 410.9 pence after Morgan Stanley removed the parent of British Airways from its best-ideas list, citing few potential catalysts in the next quarter.

CEZ rallied 5.1 percent to 569 koruna, its highest price since May. The Czech government, which controls 70 percent of the company, will demand a dividend payout of 100 percent of CEZ’s 2013 net income, Hospodarske Noviny reported, citing Finance Minister Andrej Babis. That’s up from the previous policy of 50 percent to 60 percent net income payout.

Deutsche Post AG climbed 1.7 percent to 26.09 euros. Welt am Sonntag reported that Europe’s largest postal company is seeking to lift its mail earnings by 60 percent and generate about 1.6 billion euros ($2.2 billion) of operating profit from its mail unit, the newspaper said, citing supervisory board members it didn’t specify.

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