European Stocks Decline to Seven-Week Low on Results
European stocks declined for a third day, with the Stoxx Europe 600 Index (SXXP) sliding to its lowest level in almost seven weeks as results from companies including Alfa Laval AB and D.E Master Blenders (DE) 1753 NV disappointed investors.
Alfa Laval and D.E Master Blenders fell at least 5 percent each. Mulberry Group Plc (MUL) plunged 24 percent after unexpectedly saying profit will fall. Chemical makers including Arkema SA (AKE) tumbled after DuPont Co.’s earnings lagged forecasts.
The Stoxx Europe 600 Index lost 1.7 percent to 268.40 at the close of trading, its lowest level since Sept. 5. The gauge has erased most of the gains since European Central Bank officials agreed on an unlimited bond-purchase program.
“An ugly session for equity markets has unfolded today as sellers drove stocks lower on the back of some disappointing corporate earnings,” said Angus Campbell, head of market analysis at Capital Spreads in London.
“With a lack of macro-economic data releases, the focus has been very much on companies and there were some car-crash type profit warnings and well-below-expectation results which sent investors into risk aversion mode.”
Moody’s Investors Service lowered its credit rating on Catalonia and four other Spanish regions. The decision was “driven by the deterioration in their liquidity positions, as evidenced by their very limited cash reserves as of September 2012 and their significant reliance on short-term credit lines to fund operating needs,” the ratings company said.
The Spanish economy contracted for a fifth quarter in the three months through September. Gross domestic product shrank 0.4 percent from the previous three months, matching the contraction of the second quarter, the Bank of Spain said in an estimate in its monthly bulletin released in Madrid today. That compares with a median forecast for a 0.7 percent contraction in a Bloomberg News survey of 10 economists.
Spain sold 3.53 billion euros ($4.6 billion) of bills today, exceeding its maximum goal.
Euro-area consumer confidence remained little changed in October after decreasing in the previous four months. An index of household sentiment in the 17-nation euro area rose to minus 25.6 from minus 25.9 in September, the European Commission in Brussels said in an initial estimate today. The September reading was the lowest since May 2009. Economists had forecast an unchanged reading, the median of 26 estimates in a Bloomberg survey showed.
National benchmark indexes fell in all of the 18 western European markets except Iceland. France’s CAC 40 Index sank 2.2 percent, Germany’s DAX lost 2.1 percent and the U.K.’s FTSE 100 Index slid 1.4 percent.
Alfa Laval (ALFA) slipped 5.7 percent to 116.80 kronor. The company reported third-quarter order intake of 7.29 billion kronor ($1.1 billion), missing the estimates of Deutsche Bank AG and UBS AG. Alpha Laval said it sees fourth-quarter demand in line with or lower than that of the third quarter.
D.E Master Blenders, the coffee and tea company spun off by Sara Lee Corp. in June, lost 5.3 percent to 9.28 euros after it posted first-quarter revenue that missed analyst estimates as price increases in Germany led consumers to reduce purchases.
Revenue fell 1.5 percent to 645 million euros in the three months through September, the company said. Analysts had expected sales of 664 million euros.
Mulberry tumbled 24 percent to 1,006 pence. The British luxury-handbag maker said in an unscheduled announcement that profit will fall because of declining shipments to wholesale customers. Pretax profit will rise to 41.8 million pounds ($66.9 million) in the fiscal year through March, analysts had projected in a Bloomberg survey.
Burberry Plc (BRBY), the largest U.K. luxury-goods maker, slid 3.2 percent to 1,134 pence.
Chemical makers sank 2.8 percent for the biggest decline among the 19 industry groups in the Stoxx 600. DuPont, the most valuable U.S. chemical manufacturer, posted a smaller third- quarter profit than analysts estimated. Arkema SA, the French maker of industrial chemicals, sank 5.1 percent to 69.06 euros, while BASF SE (BAS) lost 4.1 percent to 62.50 euros.
Norsk Hydro ASA (NHY), Europe’s third-largest aluminum maker, retreated 5.2 percent to 25.48 kroner. The company posted a third-quarter net loss of 277 million kroner ($49 million), compared with a profit of 997 million kroner a year earlier. That surpassed a loss estimate of 142 million kroner in a Bloomberg survey. Sales declined to 19 billion kroner from 23.8 billion kroner.
Nokia Oyj (NOK1V) fell 5.1 percent to 2.05 euros. The mobile-phone maker trying to cope with falling sales and dwindling cash will sell 750 million euros of convertible bonds to address approaching debt maturities. The senior unsecured bonds due 2017 are convertible into Nokia shares, the company said.
Michelin & Cie (ML) added 3.4 percent to 63.97 euros. The world’s second-largest tiremaker said third-quarter revenue rose 5.7 percent to 5.44 billion euros, beating the 5.31 billion-euro average of seven analyst estimates compiled by Bloomberg.
Experian Plc (EXPN) advanced 3.8 percent to 1,087 pence. The credit-reference company said it has entered into a conditional agreement to acquire a further 29.6 percent interest in Brazilian credit bureau Serasa for $1.5 billion plus a cash adjustment to the date of completion.
Stora Enso Oyj (STEAV) jumped 4.8 percent to 4.91 euros. Europe’s largest papermaker, which reported third-quarter profit that missed analyst estimates, said it will close plants to improve profitability.
ARM Holdings Plc (ARM) jumped 7.7 percent to 640 pence. The company, whose chip designs power Apple Inc.’s iPhone, said it started the current quarter with a record order backlog after third-quarter sales rose more than estimated by analysts.
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