European Stocks Decline for Third Day; TNT Express DropsTom Stoukas
European stocks declined for a third day as investors watched the U.S. financial-reporting season amid concern that recent gains in share prices have overshot the earnings potential.
TNT Express NV plunged 41 percent after United Parcel Service Inc. abandoned its bid to take over the company. Electricite de France SA jumped the most in 13 months after France agreed to compensate EDF for the deficits from its mandatory public-service investments.
The Stoxx Europe 600 Index fell 0.4 percent to 286.01 at the close in London, for the longest stretch of losses in four weeks. The equity benchmark dropped last week amid the highest valuation in 11 quarters and concern that quickening inflation in China will limit the scope for economic stimulus.
“Markets have made a lot of progress so far and right at the moment, valuations are possibly just looking a little bit stretched and waiting for a touch of guidance from the U.S. earnings season,” said Guy Foster, a fund analyst at Brewin Dolphin Securities Ltd. in London.
The number of shares traded on the Stoxx 600 companies was 22 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
Of the 28 S&P 500 companies that reported quarterly results last week, 79 percent exceeded analysts’ estimates and 68 percent posted a profit increase, according to data compiled by Bloomberg. JPMorgan Chase & Co, EBay Inc., Intel Corp. and General Electric Co. are among the 40 companies reporting results this week.
Federal Reserve Bank of Chicago President Charles Evans said the central bank should continue to support economic recovery in the U.S. He spoke in Hong Kong today.
Federal Open Market Committee minutes, released Jan. 3 in Washington, showed a split on how long the $85 billion monthly bond-purchase program should last. Members were evenly divided between those who backed ending the purchases by mid-2013 and those in favor of continuing further.
Euro-zone industrial production unexpectedly fell in November, a report showed. Output dropped 0.3 percent from October, when it declined a revised 1 percent, the European Union’s statistics office in Luxembourg said. Economists had forecast an increase of 0.2 percent, according to the median of 37 estimates in a Bloomberg News survey.
National benchmark indexes fell in 11 of the 18 western European markets. The U.K.’s FTSE 100 slid 0.2 percent, while France’s CAC 40 rose less than 0.1 percent. Germany’s DAX climbed 0.2 percent.
TNT shares plunged 41 percent to 4.84 euros, for the biggest decline on the Stoxx 600. UPS scrapped its proposed 5.16 billion-euro takeover of TNT as it expects European antitrust regulators to block the deal. UPS will pay TNT 200 million euros and withdraw the offer if the deal fails, the Atlanta-based company said.
PostNL NV, which has an almost 30 percent stake in TNT, tumbled 36 percent to 1.82 euros.
Imagination Technologies Group Plc slumped 6.4 percent to 435.3 pence as Goldman Sachs Group Inc. removed it from its “conviction-buy” list saying Samsung Electronics Co. is using competing technology in its new smartphones.
EDF rose 5.2 percent to 14.37 euros, for the biggest increase since Nov. 2011. The French utility said it will receive 4.9 billion euros ($6.5 billion) in staggered payments through December 2018. The compensation relates to deficits in the Contribution to Electricity Public Services mechanism, EDF said.
Cap Gemini SA jumped 2.5 percent to 35.15 euros, the highest price since July 2011. Barclays Plc upgraded its recommendation on the stock from overweight, a rating similar to buy, from equal weight. France’s biggest computer-services company was added to the conviction-buy list at Goldman Sachs Group Inc.
Cap Gemini rallied 2.3 percent on Jan. 11 after India’s Infosys Ltd. raised its full-year sales forecast.
Swatch Group AG gained 4.2 percent to 513 Swiss francs, the highest price since at least July 1993, after saying it is buying the Harry Winston watch and jewelry brand for about $1 billion. The world’s biggest maker of Swiss watches will pay Harry Winston Diamond Corp. $750 million and assume as much as $250 million in debt, the company said in a statement.
PSA Peugeot Citroen, Europe’s second-biggest carmaker, rose 5 percent to 6.40 euros after it said its Banque PSA Finance division completed about 5.3 billion euros ($7.1 billion) in loan agreements as part of a refinancing plan.