European Stocks Decline; Barclays Leads Bank Retreat on Capital
European stocks declined from a one-month high as an unexpected increase in U.S. jobless-benefit claims and concern that banks may have to raise more capital overshadowed better-than-estimated company earnings.
Barclays Plc (BARC) led a measure of banks to the biggest drop in two weeks. National Bank of Greece SA (ETE) and Alpha Bank SA slid more than 6 percent. Rio Tinto Group climbed to a two-year high after reporting record iron ore production. Syngenta AG, the world’s biggest maker of agricultural chemicals, rose 3.8 percent as sales beat analysts’ estimates.
The Stoxx Europe 600 Index slipped 0.2 percent to 265.68 at the 4:30 p.m. close in London as four stocks fell for every three that advanced. The measure has climbed 2.3 percent this month amid speculation that the Federal Reserve will announce plans to stimulate economic growth at its November meeting. The gauge is still 2.4 percent below its April high.
“We’re seeing earnings coming in a bit better than expectations, which points to still-solid developments in the underlying economy, but some investors are using today’s U.S. jobless claims to take some of their money off the table after decent returns during the past few weeks,” said Espen Furnes, a fund manager at Storebrand ASA in Oslo, which oversees about $54 billion. “It’s still too early to expect job creation to rise significantly. The rebound will take time.”
Of the 11 S&P 500 (SPX) companies to have reported results since Oct. 8, 9 have beaten estimates for net income, according to data compiled by Bloomberg. Analysts surveyed by Bloomberg predict profits will grow 23 percent from a year earlier for companies in the index, the fourth straight quarterly increase.
European stocks erased their gains today as a Labor Department report today showed the number of Americans filing first-time applications for unemployment benefits increased by 13,000 to 462,000 last week, indicating the U.S. job market is struggling to mend.
National benchmark indexes declined in 16 of the 18 western European markets. The U.K.’s FTSE 100 (UKX) decreased 0.4 percent and France’s CAC 40 slipped 0.2 percent, while Germany’s DAX gained 0.3 percent.
Barclays, the U.K.’s third-biggest lender, slid 4.1 percent to a three-month low of 279.95 pence, leading a gauge of bank stocks to the biggest drop among 19 industry groups. Societe Generale SA (GLE) declined 3.1 percent to 41.70 euros and Royal Bank of Scotland Group Plc (RBS) fell 4.7 percent to 45.3 pence.
Standard Chartered Plc’s announcement yesterday said it will seek to raise 3.3 billion pounds ($5.3 billion) in a rights offer may encourage other banks to increase their capital to than the minimum required by international regulators, according to analyst Andrew Lim at Matrix Corporate Capital LLP.
Banks must have a Core Tier 1 ratio of at least 7 percent under Basel III capital rules agreed by regulators last month. U.K. lenders will have to constrain dividend payments to shareholders for up to three years to meet the more stringent capital requirements, according to a Credit Suisse Group AG analyst Jonathan Pierce.
National Bank of Greece and Alpha Bank sank 6.4 percent to 8.03 euros and 6.1 percent to 5.20 euros, respectively, leading Greece’s ASE Index to a 2.5 percent decline.
African Barrick Gold Plc (ABG) sank 9.5 percent to 564 pence, the biggest decline since its initial share sale in March, after saying criminal gangs “widely infiltrated” a mine in Tanzania, forcing the company to suspend 60 workers and delay production.
A.P. Moeller-Maersk A/S slid 3 percent to 46,230 kroner as UBS AG downgraded the shipping company to “sell” from “neutral.” Maersk will see net results plummet by 47 percent in 2011 as the rebound in global trade slows and container rates decline, according to UBS analyst Dominic Edridge.
Suedzucker AG (SZU) lost 1.9 percent to 16.78 euros as the world’s largest sugar refiner said second-quarter net income declined to 50 million euros ($70 million) from 55 million euros a year earlier.
Rio Tinto gained 2.4 percent to 4,134.5 pence in London, the highest level in more than two years. The world’s third-largest mining company said third-quarter iron ore output rose to 47.6 million metric tons from 47 million tons a year earlier.
Commodities extended a rally to the highest in two years on speculation the declining U.S. dollar will boost investments in metals, energies and agriculture futures.
Syngenta (SYNN) rallied 3.8 percent to 274 Swiss francs as the maker of agricultural chemicals reported third-quarter sales ahead of analysts’ estimates and said improved profitability in seeds should help meet a goal of matching last year’s earnings.
UCB SA (UCB), the Belgian maker of the Cimzia treatment for rheumatoid arthritis, surged 6 percent to 27.82 euros on speculation that it may be an acquisition target.
“It’s linked to M&A speculation following the move of Pfizer earlier this week with its acquisition of King and the intended bid of Sanofi for Genzyme,” Jan Van Den Bossche, an analyst for Petercam SA, said.
“This is speculation without any foundation,” said Antje Witte, a company spokeswoman.
Actelion Ltd. (ATLN), the Swiss biotechnology company that’s considering strategic alternatives, soared 6.6 percent to 53 francs. Roland Haefeli, a spokesman for the company, declined to comment on the share-price move.
Preferred shares of Hugo Boss AG (BOSS) advanced 4.7 percent to 46.12 euros after Germany’s largest clothing maker raised its sales and profit forecasts. Earnings before interest, taxes, depreciation, amortization and one-time items will rise about 20 percent for the year, according to the Metzingen-based company, which previously forecast growth of 10 percent to 12 percent.
Ashmore Group Plc (ASHM), a U.K. fund manager that focuses on emerging markets, rose 5 percent to 379.6 pence. Assets under management grew to $41.6 billion in the third quarter from $35.3 billion at the end of the previous period, the company said.