European Stocks Are Little Changed After Six-Day Slide; Home Retail Sinks
European stocks were little changed after six days of losses as declines in retailers and banks offset gains in utilities. Asian shares fell, while U.S. index futures rose.
Home Retail Group Plc (HOME) plunged the most in 2 1/2 years after sales at its Argos chain declined. Elekta AB (EKTAB) rallied 2.9 percent as the world’s second-largest maker of radiation-treatment equipment reported earnings that topped estimates. Suez Environnement SA advanced 2.1 percent as JPMorgan Chase & Co. upgraded the shares.
The Stoxx Europe 600 Index rose less than 0.1 percent to 269.04 at 1:46 p.m. in London after earlier rising as much as 0.6 percent. The measure has fallen 7.6 percent from this year’s high on Feb. 17 and is trading at about 12.8 times its companies’ reported earnings, the cheapest valuation since 2008, according to data compiled by Bloomberg.
“There’s room for a technical rebound, but it remains just that,” said Vincent Guenzi, a fund manager at Cholet-Dupont Gestion SA in Paris, which oversees $2.9 billion. “We don’t see a new upswing because there isn’t a motor.”
The MSCI Asia Pacific Index lost 0.4 percent today, while futures on the Standard & Poor’s 500 Index added 0.2 percent, indicating the gauge will rebound from a 2 1/2 month low.
The Federal Reserve said yesterday after European markets closed that the economy expanded at a “steady pace” in most of the U.S., while slowing in 4 of 12 regions as consumers contended with higher food and fuel prices and shortages of parts reduced car production.
The report underscores Chairman Ben S. Bernanke’s statement on June 7 that the central bank should maintain record stimulus to bolster a “frustratingly slow” recovery. He predicted that the economy will pick up in the second half of the year as energy prices moderate and factory disruptions ease as suppliers of parts from Japan recover from an earthquake and tsunami.
A report showed U.S. applications for unemployment insurance payments unexpectedly rose last week, a sign that the labor market is struggling to gain traction. Jobless claims increased by 1,000 to 427,000 in the week ended June 4, according to the Labor Department.
The European Central Bank kept its benchmark interest rate at 1.25 percent today, while the Bank of England held its key rate at 0.5 percent and left its bond-purchase program unchanged at 200 billion pounds ($328 billion).
ECB President Jean-Claude Trichet signaled the bank intends to raise interest rates next month, saying “strong vigilance” is warranted to contain inflation.
Home Retail tumbled 13 percent to 177 pence, its biggest drop since December 2008, after the retailer said revenue at Argos stores open at least a year fell 9.6 percent in the 13 weeks ended May 28. Shore Capital analyst Ramona Tipnis had estimated a 4 percent drop.
Elekta rallied 2.9 percent to 266 kronor. The maker of radiation-treatment equipment said fourth-quarter net income rose to 531 million kronor ($86 million) from 476 million kronor a year earlier. Analysts had estimated profit of 522 million kronor, according to a survey compiled by Bloomberg.
Suez Environnement advanced 2.1 percent to 14.28 euros as the stock was raised to “overweight” from “neutral” at JPMorgan. A measure of utilities had the biggest gain among 19 industry groups in the Stoxx 600.
Club Mediterranee (CU) SA surged 3.7 percent to 15.92 euros. The French holiday resort operator said first-half net income rose to 10 million euros ($14.6 million) from 3 million euros.
Halfords Group Plc (HFD) advanced 3.1 percent to 410.3 pence. The U.K. seller of car parts and bicycles said profit rose 11 percent to 85.5 million pounds in the year ended March 31 as improved margins offset a squeeze on consumer spending.
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