European Stocks Decline as EU Leaders Meet in Brussels
European (SXXP) stocks declined from a 4 1/2-year high, as European Union leaders eased constraints on national budgets amid a deepening euro-area recession, and confidence among American consumers unexpectedly slid in March.
Volkswagen AG fell to the lowest since November after Waddell & Reed Financial Inc. sold shares. Vivendi SA ended a five-day rally after halting the planned sale of its Brazilian phone and Internet unit, GVT. Ingenico SA (ING) fell to its lowest in three weeks as Safran SA’s Morpho plans to sell part of its stake. Rentokil (RTO) Initial Plc surged the most in 3 1/2 years after saying 2012 finished strongly.
The Stoxx Europe 600 Index fell 0.5 percent to 297.19 at 3:02 p.m. in London. The gauge is heading for a 0.6 percent gain this week, on course for a fourth straight weekly advance, its longest winning streak since December. The benchmark has risen 6.3 percent this year as data on U.S. payrolls and Chinese exports bolstered confidence in the global economic recovery and central banks around the world continued stimulus measures.
“After the impressive performance of the past weeks and months, the rally is seeing a bit of fatigue,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “U.S. economic figures have been good, but there is the need for the market to take a pause. With the expiries today, it’s best not to have any bad news.”
Stock moves may be influenced by the expiration of futures and options contracts today, a process known as witching. The volume of Stoxx 600 shares changing hands was 37 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.
National benchmark indexes fell in all of the western European markets except Iceland and Switzerland. Germany’s DAX slid 0.5 percent, while France’s CAC 40 lost 0.7 percent. The U.K.’s FTSE 100 retreated 0.8 percent.
European Union leaders endorsed “structural” budgetary assessments, using code for granting countries such as France, Spain and Portugal extra time to bring down deficits. Still, balanced budgets remained the goal and there was no talk of large-scale spending programs or bond issues.
“If there is too much austerity, there will be too much unemployment,” French President Francois Hollande said at an EU summit in Brussels late yesterday. “Flexibility is necessary if we want to make growth the priority.”
European political chiefs also paved the way for finance ministers to wrangle a rescue for Cyprus today as the euro area seeks progress toward a bailout that’s been batted about for nine months.
“I can’t imagine that we’ll let the weekend go by without resolving the Cyprus problem,” Luxembourg Prime Minister Jean- Claude Juncker said early today after euro leaders met midway through the two-day summit in Brussels. The EU gathering ends today with a 27-nation discussion of foreign policy, to be followed by a euro-area ministers’ meeting.
In the U.S., the Thomson Reuters/University of Michigan preliminary sentiment index for March fell to 71.8 from 77.6 in February. The gauge was projected to increase to 78, according to the median estimate of 67 economists surveyed by Bloomberg.
In Asia, Japan’s political parties confirmed Haruhiko Kuroda as the Bank of Japan governor as well as Kikuo Iwata and Hiroshi Nakaso as deputies, ushering in a leadership that may push for more monetary stimulus within weeks.
Volkswagen’s preferred shares declined 3.5 percent to 158.90 euros. Waddell & Reed sold 914 million euros ($1.19 billion) of the stocks, after they touched a four-month low yesterday on the carmaker’s 2013 outlook. The 5.78 million shares were sold for 158 euros each, a 4 percent discount to yesterday’s close, Deutsche Bank AG said.
Bwin.Party Digital Entertainment Plc (BPTY) slipped 0.7 percent to 150.5 pence after forecasting 2013 revenue lower than current market estimates. Gross average daily revenue in January and February fell 7 percent from the final quarter of 2012 after a decision to “focus on nationally regulated markets and on high value customers,” the gambling company said. The shares had earlier fallen as much as 8.3 percent.
Vivendi (VIV) lost 3.5 percent to 16.07 euros. The company halted the planned sale of GVT after failing to get a satisfactory bid for the division, which had been valued at 5.2 billion euros.
Vivendi wasn’t satisfied with the offers it received and now prefers to develop GVT, a spokesman said yesterday. It solicited bids for the division last year.
Ingenico, a French provider of payment terminals and services, declined 2.9 percent to 44.66 euros. Safran’s Morpho will sell 6.6 million Ingenico shares, or a 12.57 percent stake, in a private placement, while retaining a 10.2 percent stake.
Rentokil surged 10 percent to 99.9 pence, its biggest increase since July 2009. The world’s largest pest control company said 2012 saw a “strong finish” with fourth-quarter adjusted pretax profit rising 15.9 percent.
Bouygues SA (EN) gained 2.8 percent to 22.94 euros. The owner of France’s third-largest mobile phone company won approval from the telecommunications regulator to use the 1,800 megahertz band to offer faster services from Oct. 1.
Banca Popolare dell’Emilia Romagna Scarl jumped 8.8 percent to 5.92 euros. Exane BNP Paribas raised its target price for the shares by 5 percent to 8.30 euros, citing the benefits of the bank’s funding structure, which is based on retail deposits.
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