Most European Stocks Decline as Travel Companies Retreat
Most European stocks dropped, following the Stoxx Europe 600 Index’s largest decline in a month yesterday, as travel-and-leisure companies slid after TUI AG reported a wider loss and auto-related shares slipped.
TUI AG fell 2.5 percent after the tour operator’s loss before interest, taxes and amortization widened. Renault SA and Daimler AG each retreated more than 1 percent as a report showed European car sales slowed. Banco Espirito Santo SA decreased 5.5 percent as it announced a capital increase. Bouygues SA (EN) climbed 4.4 percent after a report that Orange SA has studied buying Bouygues Telecom.
The Stoxx 600 added 0.1 percent to 338.99 at the close of trading as more than three stocks retreated for every two that advanced. The benchmark has advanced 0.1 percent this week. It rose to a six-year high on May 13 as mergers-and-acquisitions activity increased and European Central Bank President Mario Draghi said officials are ready to ease monetary policy at their June meeting if necessary.
“The market doesn’t have many impulses at the moment to lift it higher,” said Markus Wallner, an equity strategist at Commerzbank AG in Frankfurt. “First-quarter results haven’t been that impressive and have come in quite mixed. The focus for European markets will be less the fundamental economic data, but more the ECB and possible stimulus coming.”
In the U.S., a Commerce Department report showed that housing starts increased to an annualized rate of 1.07 million in April, beating the median estimate of 980,000 in a Bloomberg News survey. The federal government revised the figure for March upward to 947,000.
A separate release showed that consumer confidence unexpectedly declined in May. The preliminary reading of the Thomson Reuters/University of Michigan index of sentiment dropped to 81.8 this month from 84.1 in April. Economists surveyed (CONSSENT) by Bloomberg had predicted a reading of 84.5.
National benchmark indexes retreated in 11 of the 17 western-European markets that opened today. Denmark’s stock exchange is closed today for a holiday. France’s CAC 40 advanced 0.3 percent, while Germany’s DAX retreated 0.3 percent. The U.K.’s FTSE 100 gained 0.2 percent.
TUI slipped 2.5 percent to 11.76 euros. The company’s loss before interest, taxes and amortization widened to 205 million euros ($281 million) in the second quarter of its financial year from 197 million euros a year earlier.
Renault dropped 2.4 percent to 64.56 euros, while Daimler, which owns the Mercedes Benz brand, lost 1.2 percent to 65.21 euros. A report from the European Automobile Manufacturers Association showed that car sales increased 4.2 percent to 1.13 million units in April, their slowest pace in five months.
Banco Espirito slid 5.5 percent to 1 euro, completing its biggest weekly drop in two years. The Portuguese lender said late yesterday that it plans to raise as much as 1.05 billion euros in a rights offering to strengthen its capital ratios. Diario Economico reported on May 14 that Banco Espirito was preparing a capital increase. The company reported a first-quarter loss of 89.2 million euros yesterday, wider than the 62 million-euro loss it reported a year earlier.
Intertek Group Plc fell 3.2 percent to 2,992 pence after saying it experienced weaker-than-expected activity in the energy-infrastructure market. The company also said the strength of the pound has reduced its revenue.
Bouygues advanced 4.4 percent to 33.08 euros. Les Echos reported late yesterday that Orange’s Chief Executive Officer Stephane Richard and his counterpart at Bouygues, Martin Bouygues, have discussed a transaction more than once. The French newspaper did not say where it got the information.
Orange said in a statement yesterday that consolidation in the French mobile-phone market would be positive in the long term. It did not refer to Bouygues. Orange gained 1.5 percent to 12.46 euros, while Iliad SA, the most recent entrant to the mobile-phone market, jumped 6.1 percent to 219.50 euros.
Separately, Bouygues said first-quarter revenue reached 6.84 billion euros, beating the 6.56 billion-euro average analyst estimate. The company’s operating loss before one-off items and restructuring costs widened to 96 million euros from 77 million euros a year earlier.
Wm Morrison Supermarkets Plc rose 3.8 percent to 212.9 pence, its highest price since March. The Daily Mail reported that a U.S.-led private-equity consortium may make a bid for the U.K.’s fourth-largest grocery chain.
The volume of shares changing hands in Stoxx 600-listed companies was 34 percent greater than the average of the last 30 days for this time of day, data compiled by Bloomberg show.
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