European Shares Drop as Earnings Fail to Inspire, Bayer Slides

Could Brexit Spark a Recession?
  • Bayer retreats after said to be mulling bid for Monsanto
  • Energy producers pare gains as oil falls on Canada production

European shares declined for a second day as the latest batch of earnings releases failed to ease investor concerns over the region’s corporate and economic health, while oil reversed gains.

Bayer AG dragged chemical companies lower after it was said to be exploring a bid for Monsanto Co. Aegon NV plummeted 11 percent after the Dutch owner of insurer Transamerica Corp. reported a 50 percent drop in earnings. Assicurazioni Generali SpA lost 4 percent after Italy’s biggest insurer said quarterly profit fell 14 percent. Miners tumbled as metals prices retreated. A gauge of energy producers trimmed its gain to 0.2 percent from 2.3 percent amid signs Canadian oil-sands production is coming back online.

The Stoxx 600 slid 0.5 percent to 333.11 at the close of trading, after gaining as much as 0.8 percent and losing 1 percent. A rally that pushed the index up 16 percent from a February low unraveled as disappointing economic data cast a pall on global-growth prospects, and analysts reversed profit projections for Stoxx 600 firms this year to forecast a contraction.

“A mixed set of results from companies delivered against lowered expectations is not helping the markets,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “The real trigger the market needs right now is improvement in global growth prospects and it doesn’t feel like that is happening.”

The FTSE 100 Index slipped 1 percent as the Bank of England cut its growth estimates and issued its strongest warning yet that a vote to leave the European Union would hurt the economy. As forecast by all economists in a Bloomberg survey, officials also kept interest rates unchanged.  

“Investors want to play it safe before the Brexit vote and wait it out instead of taking a risk even though most investors don’t believe Brexit will happen,” said Galliker.

Among other shares moving on corporate news today, Credit Agricole SA retreated 4.9 percent after posting a 71 percent drop in profit.

Zurich Insurance Group AG added 6.6 percent after Switzerland’s biggest insurer posted better-than-expected profit. RWE AG led utilities higher, jumping 6.8 percent after the German power producer said that first-quarter profit was little changed as “unusually high earnings” from trading countered slumping power prices.

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