Europe Stocks Fall as Investors Turn Focus Back to Global Growth

How Does the Fed Rate Hike Impact Currencies?
  • Stoxx Europe 600 Index posts first weekly advance in three
  • European shares still set for worst December since 2002

European shares fell as investors turned their attention back to global growth prospects, after the Federal Reserve’s interest rate move helped the Stoxx Europe 600 Index to its biggest three-day advance since August.

The benchmark gauge slid 1 percent to 361.23 at the close of trading, trimming its weekly gain to 1.5 percent. It’s still heading for its worst December since 2002. 

“Bullish Fed rhetoric can only get you so far,” said Michael Ingram, a market strategist at BGC Partners in London. “None of the worries about global growth and financial instability have really gone away. Given year-to-date performance, any Santa Rally is likely to prove cold comfort.”

The Stoxx 600 rose 4.4 percent in the three days through Thursday on optimism that the Federal Reserve would judge the world’s biggest economy strong enough to cope with higher borrowing costs. Exporters and financial companies led a rally yesterday after Fed Chair Janet Yellen satisfied markets with the first U.S. interest-rate increase in almost a decade, while assuring that further moves will be gradual. 

While the Stoxx 600 posted its first weekly rise in three, it is still down 6.3 percent this month. After a 14 percent jump from its September low through end November, the gauge lost as much as 9.3 percent amid disappointing stimulus measures from the European Central Bank and a deepening of the rout in commodities. 

As concerns about global growth resurface, a measure of European stock volatility jumped 5.9 percent. The expiration of some futures and options on stocks and indexes today, known as quadruple witching, typically adds to stock swings.

Spain’s benchmark IBEX 35 Index slid 1.6 percent, for the second-worst performance among western-European markets, ahead of a general election on Sunday that pits a new generation of leaders against the two-party system that has ruled for the past three decades. Twenty-nine of the index’s 34 members fell.

Altice NV slid 5.9 percent after a record three-day surge, dragging a telecommunications gauge to the worst performance of the 19 industry groups on the Stoxx 600, as the U.S. Justice department asked for a decision on the bid for Cablevision Systems Corp. to be deferred. Telefonica Deutschland Holding AG dropped 1.3 percent after Morgan Stanley cut its recommendation to the equivalent of a sell.

Casino Guichard-Perrachon SA reversed earlier losses to rise 1.5 percent. Shares tumbled 12 percent yesterday after short seller Carson Block accused the company of using “financial engineering” to mask a “sharply deteriorating core business.” JPMorgan Chase & Co. defended the French retailer, saying it strongly disagreed with Block. 

A.P. Moeller-Maersk A/S retreated 2.9 percent after Danske Bank downgraded the company to hold from buy, citing the impact of plunging oil prices on the container business.

Anglo American Plc rose 5.7 percent, leading a gauge of miners to the best performance on the European index as commodity prices rebounded from their lowest since 1999. Norsk Hydro ASA climbed 2 percent after it announced the sale of an industrial park to Oslo Pensjonsforsikring AS.

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