Most European Stocks Drop as Finance Ministers Discuss IMF Aid
Most European stocks declined, following two weeks of losses for the Stoxx Europe 600 Index, as euro-area policy makers discussed channeling additional financial support through the International Monetary Fund.
SGL Carbon SE (SGL) plunged more than 9 percent after its chief financial officer said the company doesn’t expect its shareholders Bayerische Motoren Werke AG and Susanne Klatten to mount a takeover. Air Berlin Plc (AB1) soared after saying that Etihad Airways will increase its stake in the company to 29.2 percent. Nestle SA (NESN) added 2 percent.
The Stoxx 600 advanced less than 0.1 percent to 233.75 at the close in London. Three stocks dropped for every two that climbed. The gauge earlier fell as much as 0.7 percent as Fitch Ratings said it may downgrade France, Spain and Italy and the death of Kim Jong Il, North Korea’s leader for 17 years, increased concern about instability in the region.
“We’ve been expecting volatility to continue, but eventually markets will settle down,” said Kevin Gardiner, head of global investment strategy at Barclays Wealth in London. “People have lost sight of the fact that markets can occasionally get tired of a particular story. If they feel that politicians are doing just enough to move in the right direction on a long-term basis, then I think markets can actually start to look elsewhere.”
The Stoxx 600 slipped 2.8 percent last week, dropping for a second week, as concern lingered that the euro area’s debt crisis is deepening and as the Federal Reserve refrained from taking new action to bolster the world’s largest economy. The gauge has retreated 15 percent this year.
Euro-area finance ministers held a conference call today to discuss channeling 200 billion euros ($260 billion) in additional funding through the International Monetary Fund and the mechanics of a so-called fiscal compact that were agreed upon in the Dec. 9 European Union summit accord, according to two people familiar with the matter.
The European Central Bank will offer unlimited funding against collateral for as long as three years in a tender tomorrow in President Mario Draghi’s latest attempt to get cash flowing around the financial system. It’s up to lenders to decide what to do with the money, he told the Financial Times in an interview.
Fitch lowered France’s credit outlook and put the grades of nations including Spain and Italy on review for a downgrade, citing the euro area’s failure to find a “comprehensive solution” to its debt crisis. Fitch placed Spain, Italy, Belgium, Slovenia, Ireland and Cyprus on a “Rating Watch Negative” review, which it expects to complete by the end of January, according to a statement.
The official Korean Central News Agency said that Kim died on Dec. 17 from a heart attack brought on by mental and physical strain. State media urged citizens to “loyally follow” Kim Jong Un, who is at the “forefront of the revolution.”
National benchmark indexes declined in 12 of the 18 western European markets. France’s CAC 40 Index added 0.1 percent, Germany’s DAX Index slipped 0.5 percent and the U.K.’s FTSE 100 Index sank 0.4 percent.
SGL Carbon declined 9.5 percent to 40.99 euros after Chief Financial Officer Juergen Muth told the Frankfurter Allgemeine Sonntagszeitung that the German maker of carbon and graphite products regards a takeover by Bayerische Motoren Werke AG and the carmaker’s heiress Susanne Klatten as unlikely. BMW and Klatten together hold about 44 percent in SGL.
BP, Mining Companies
Vedanta Resources Plc (VED) dropped 3.6 percent to 1,046 pence. Antofagasta Plc slid 1.9 percent to 1,150 pence and Xstrata Plc lost 1.4 percent to 956.7 pence.
In November, 49 big cities monitored in China posted house- price declines, the most this year, after the government affirmed plans to maintain property curbs.
Air Berlin rallied 8.3 percent to 2.50 euros after saying that Etihad Airways, Abu Dhabi’s state-controlled airline, will pay 72.9 million euros to increase its stake in the German airline to 29.2 percent. Etihad will purchase 31.6 million new shares at Dec. 16’s closing price of 2.31 euros a piece, Air Berlin said in a statement. Etihad will keep the shares for at least two years and not increase its stake during that time.
Nestle climbed 2 percent to 52.20 Swiss francs as the world’s biggest food company limited declines on the Stoxx 600.
UniCredit SpA (UCG) gained 2.2 percent to 69.6 euro cents as financial newspaper Il Sole reported that Fondazione CRT will sell its stakes in Societe Generale SA and Banco de Sabadell SA to free up funds to subscribe to UniCredit’s capital increase.
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