European Stocks Decline as Stoxx 600 Erases Monthly Gain
European stocks fell, extending a weekly loss, as oil and gas companies dropped, outweighing better-than-expected euro-area economic confidence data.
BP Plc and Royal Dutch Shell Plc each slipped at least 1 percent as crude declined after the U.K. parliament rejected a motion for military action against Syria. Royal KPN (KPN) NV slid 3.4 percent after America Movil SAB said it may withdraw its takeover bid if opposed by the company’s independent foundation. Hermes International SCA climbed 2.1 percent after reporting operating profit that surpassed analysts’ estimates.
The Stoxx Europe 600 Index dropped 0.9 percent to 297.32 at the close of trading, its lowest level since July 17. The gauge fell 2.4 percent this week, its second weekly decline, for a 0.8 percent monthly loss, amid concern that the U.S. and its allies will take military action against Syria. It has still risen 7.9 percent since a June 24 low as central banks pledged to support the global economy and data showed the euro area emerged from a record-long recession in the second quarter.
“In the short term, European equities have gone a bit too far,” said Max King, a London-based investment strategist at Investec Asset Management, which manages about $104 billion. “We’re worried that people are extrapolating a flattening out of the euro-zone economy into growth and getting carried away.”
The volume of shares changing hands in Stoxx 600-listed companies was 21 percent higher than the average of the last 30 days, data compiled by Bloomberg show.
Economic confidence in the euro area soared to a two-year high in August. An index of executive and consumer sentiment rose for a fourth month to 95.2 from 92.5 in July, the European Commission in Brussels said. The median of 26 economists’ forecasts in a Bloomberg News survey was for a gain to 93.8.
In the U.S., the MNI Chicago Report business barometer rose to 53 in August from a reading of 52.3 the prior month. Numbers greater than 50 signal expansion. The median forecast of 53 economists surveyed by Bloomberg was 53. The regional index is viewed as an indicator of business activity across the U.S.
Separate data from the Commerce Department showed consumer spending, which accounts for about 70 percent of the U.S. economy, rose 0.1 percent after a revised 0.6 percent increase the prior month that was larger than previously estimated. The median forecast in a Bloomberg survey of economists called for a 0.3 percent rise.
National benchmark indexes fell in all western European markets except Greece. The U.K.’s FTSE 100 lost 1.1 percent, France’s CAC 40 retreated 1.3 percent and Germany’s DAX retreated 1.1 percent.
BP fell 1 percent to 446.2 pence, Total SA dropped 1.4 percent to 41.92 euros and Shell lost 1.4 percent to 24.49 pence as a gauge of oil and gas companies posted the fourth-worst performance of the 19 industry groups on the Stoxx 600.
Crude fell for a second day as the U.K.’s House of Commons rejected Prime Minister David Cameron’s proposal for strikes against Syria.
KPN slid 3.4 percent to 2.21 euros, paring earlier losses of as much as 8.4 percent. The company’s independent foundation yesterday exercised an option to acquire preferred shares, giving it almost 50 percent of issued and voting stock. America Movil said today it may withdraw its offer of 2.40 euros a share for majority control of the Dutch phone company if blocked by the KPN foundation.
Danone SA (BN) declined 1.6 percent to 56.34 euros after saying baby-nutrition sales will fall in Asia in the third quarter. The company said it had to recall infant-formula products after milk-powder supplier Fonterra Cooperative Group Ltd. warned of a contaminated ingredient.
ThromboGenics NV (THR) tumbled 18 percent to 22.93 euros, the biggest drop since at least July 2006. The Belgian drugmaker said sales of Jetrea, the eye drug approved by the U.S. last year, will not increase in the second half of the year. That implies full-year sales will be 36 percent less than estimates for 39.4 million euros, according to Richard Vosser, an analyst at JPMorgan Chase & Co. in London.
Bwin.Party Digital Entertainment Plc (BPTY) plunged 14 percent to 110 pence, the biggest drop since April 2011, after the online gaming company said 2013 sales will be 14 percent to 17 percent lower than last year’s figures. Analysts on average had forecast a sales drop of 9.2 percent.
Hermes (RMS) added 2.1 percent to 253.70 euros. The French maker of Kelly bags reported first-half operating profit rose 14 percent to 584.1 million euros ($773.6 million), exceeding the 569 million-euro average estimate of analysts in a Bloomberg survey. It also confirmed its July forecast that sales in 2013, excluding currency swings, will increase more than 10 percent.
Telecom Italia SpA (TIT) surged 9.4 percent to 53 euro cents after Sanford C. Bernstein & Co. said Italy’s biggest phone company is a potential takeover target for telecommunications operators including Vodafone Group Plc and AT&T Inc.
L’Oreal SA (OR) advanced 3.2 percent to 126.25 euros, the biggest gain in more than four months, after saying first-half operating profit rose to 2.04 billion euros, or 17.4 percent of sales. That’s a record percentage for a six-month period.
Separately, Chief Executive Officer Jean-Paul Agon said in an interview with Les Echos that the world’s biggest cosmetics maker has the resources to buy back the more-than 29 percent stake owned by Nestle SA.
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