European Stocks Drop as Oil Climbs, U.S. Jobs Data Indicate Wages May Lag
European stocks fell after U.S. wages failed to keep pace with a surge in energy costs and oil climbed as investors speculated that pro-democracy protests in North Africa will spread to the Arabian peninsula.
Carrefour SA, the world’s second-largest retailer, slid 4.4 percent after Citigroup Inc. advised investors to sell the shares. WPP Plc (WPP) declined 2.6 percent after posting sales growth that failed to match its competitors. SBM Offshore NV (SBMO), the world’s biggest producer of floating oil rigs, jumped 6.3 percent after earnings beat analysts’ projections.
The benchmark Stoxx Europe 600 Index declined 0.6 percent to 281.87 at the 4:30 p.m. close in London. The measure lost 0.8 percent this week as concern that popular protests will spread to Saudi Arabia offset better-than-estimated corporate earnings and signs that the global economy is strengthening.
Stocks erased earlier gains today after a U.S. Labor Department report said average hourly earnings failed to grow in February. Economists in a Bloomberg survey had forecast 0.2 percent growth.
U.S. employers added 192,000 workers in February, amid an improving economy and more seasonable weather. The gain in payrolls followed a 63,000 increase in January and compared with the 196,000 median estimate of economists surveyed by Bloomberg News. The unemployment rate unexpectedly declined to 8.9 percent, the lowest level since April 2009.
“The quality of the jobs report isn’t exceptional,” said Benoit de Broissia, an analyst at KBL Richelieu in Paris, which oversees $4.1 billion. “The average salary isn’t growing. The data wasn’t a very big surprise. It’s sufficient, but some expected better. The market needs to take a breath. Oil gaining also explains declines in stocks. The situation still isn’t clear in the Middle East and North Africa.”
Oil rose to a 29-month high in New York, as forces loyal to Libyan ruler Muammar Qaddafi attacked key towns in the east of the country and fought with protesters in the capital Tripoli.
The Stoxx 600 pared its gains yesterday after European Central Bank President Jean-Claude Trichet signaled that the ECB may raise interest rates next month, sparking a selloff in Spanish stocks.
National benchmark indexes slid in 12 of the 18 western European markets. The U.K.’s FTSE 100 Index (UKX) slipped 0.2 percent, Germany’s DAX Index (DAX) lost 0.7 percent and France’s CAC 40 Index (CAC) sank 1 percent.
Carrefour tumbled 4.4 percent to 32.26 euros, for a weekly loss of 9.2 percent. The stock was cut to “sell” from “hold” at Citigroup, which cited the “gloomy post financial year 2010 results outlook and the value-destructive spinoffs announced.” The brokerage cut its price forecast to 30 euros from 37 euros.
WPP declined 2.6 percent to 814.5 pence after the world’s biggest advertising agency reported an increase in 2010 sales that failed to keep pace with the rate of growth reported by rival Publicis Groupe SA. WPP also said that earnings before interest, taxes, depreciation and amortization increased to 1.44 billion pounds ($2.34 billion) in 2010, exceeding the average estimate for Ebitda of 1.4 billion pounds in a Bloomberg survey of analysts.
SBM Offshore soared 6.3 percent to 19.49 euros. The company posted full-year earnings before interest and taxes of $362 million, exceeding the average estimate for Ebit of $319 million in a Bloomberg survey of 16 analysts.
Areva SA (CEI) jumped 5 percent to 35.23 euros after the biggest supplier of nuclear fuel and services’ Chief Executive Officer Anne Lauvergeon said the company doesn’t need to raise extra funds, following last year’s capital increase. Areva also scrapped its dividend payout for 2010 and reported full-year profit that missed estimates because of charges. Net income rose 60 percent to 883 million euros ($1.23 billion), less than the 1.06 billion-euro estimate in a Bloomberg survey of analysts.
Veolia Environnement SA (VIE) lost 3.7 percent to 22.15 euros as the world’s largest water utility said 2010 net profit fell to 581.1 million euros from a restated 584.1 million euros in 2009. The company pledged to sell 4 billion euros of assets over three years after posting the unexpected drop in full-year profit.
Cie. Nationale a Portefeuille SA soared 19 percent to 48.15 euros, the largest gain on the Stoxx 600, after Belgian billionaire Albert Frere and BNP Paribas (BNP) SA, France’s largest bank, offered 1.5 billion euros to buy out minority investors in the investment company.
Devgen (DEVG), Legrand
Devgen NV surged 5.9 percent to 5.72 euros after the Belgian developer of hybrid rice, sunflower, sorghum and pearl millet seeds said that its loss narrowed in 2010 to 7.1 million euros from 8.5 million euros in 2009. The company predicted “significant” growth in sales and profit at its seeds business in 2011, and said it’s confident it can finance its operations for the next few years.
Legrand SA (LR) slid 5.3 percent to 28.70 euros, the largest drop on the Stoxx 600. Kohlberg Kravis Roberts & Co. and Wendel sold stakes in the world’s largest maker of electrical switches before the expiry of an agreement not to do so. The pair sold 40 million shares, or 15 percent of the company, at 28.75 euros apiece, according to two people familiar with the sale. Wendel (MF)’s shares were little changed at 72.75 euros as it said it made a 430 million-euro profit from the sale of its 8.3 percent stake in Legrand.
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