European Stocks Little Changed; HSBC Declines on EarningsTom Stoukas
European stocks were little changed as utility shares rallied, offsetting HSBC Holdings Plc’s biggest retreat since July and a survey that showed China’s services industries slowed last month.
HSBC contributed the most to a decline by a gauge of European lenders after reporting pretax earnings that missed analysts’ estimates. BHP Billiton Ltd. and Rio Tinto Group each lost more than 2 percent as commodity producers slipped. Debenhams Plc slid the most since November 2008 after saying that profit will drop in the first half of the year because it snowed in January.
The Stoxx Europe 600 Index slipped less than 0.1 percent to 288.89 at the close of trading as more than four stocks fell for every three that rose. The equity benchmark was little changed last week as Italy’s inconclusive elections reignited concern that the euro area’s debt crisis will worsen, offsetting U.S. economic data that beat forecasts.
“It seems that equities have run a bit too fast relative to the reality of a still subdued, and in some places, vulnerable recovery,” said Witold Bahrke, who helps oversee $55 billion of assets as senior strategist at PFA Pension A/S in Copenhagen. “Together with increasing political noise, from Europe primarily, this doesn’t bode well.”
In China, the non-manufacturing purchasing managers’ index for the world’s second-largest economy fell to 54.5 in February from 56.2 in January, the National Bureau of Statistics and China Federation of Logistics and Purchasing said.
China’s government intensified its three-year campaign to cool the real estate market, ordering larger deposits and stricter enforcement of sales taxes. The People’s Bank of China’s regional branches may implement the measures in conjunction with the price-control targets of local governments, the country’s cabinet said in a statement.
In Rome, a senior aide to Democratic Party leader Pier Luigi Bersani said the country will need to hold another election if the center left fails to build a coalition commanding a majority of seats in the Senate.
The finance ministers of the 17-member euro area meet in Brussels today to discuss the planned bailout for Cyprus.
National benchmark indexes dropped in 12 of the 18 western-European markets. The U.K.’s FTSE 100 slipped 0.5 percent, France’s CAC 40 rose 0.3 percent and Germany’s DAX retreated 0.2 percent. Greece’s ASE Index lost 2.1 percent after Russell Investments reclassified the country as an emerging market.
HSBC dropped 2.5 percent to 710 pence after saying pretax earnings fell 5.6 percent in 2012 because of a record settlement for anti-money-laundering sanctions in the U.S. and a charge to revalue its own debt. Profit of $20.65 billion trailed the $23.49 billion estimate of 26 analysts surveyed by Bloomberg. The lender took a $5.2 billion charge for revaluing its debt.
A gauge of European commodity producers lost 2.1 percent for the biggest drop among the 19 industry groups on the Stoxx 600. BHP Billiton and Rio Tinto, the world’s largest mining companies, slid 2.1 percent to 2,037 pence and 3.7 percent to 3,316 pence, respectively. Kazakhmys Plc, Kazakhstan’s biggest copper producer, tumbled 5.9 percent to 555 pence.
Anglo American Plc retreated 2.7 percent to 1,849 pence after Nomura Holdings Inc. downgraded the stock to reduce, a rating similar to sell, from neutral. The brokerage said that analysts need to lower their estimates for the company’s earnings this year.
Debenhams slumped 15 percent to 80.7 pence, for the biggest tumble on the Stoxx 600. The second-largest U.K. department store forecast that pretax profit for the first half of the year will decline to 120 million pounds ($181 million) after snow disrupted sales. Comparable revenue dropped 10 percent from Jan. 14 to Jan. 27, the retailer said.
Metro AG retreated 6.2 percent to 21.14 euros as Citigroup Inc. cut its price forecast for Germany’s largest retailer to 15 euros from 19 euros and repeated a sell recommendation. The shares slid on March 1 after Metro cut its full-year dividend 26 percent and posted earnings that missed analysts’ estimates.
Taylor Wimpey Plc dropped 2.6 percent to 81.45 pence after the U.K. housebuilder was downgraded to sell from neutral at Citigroup. The brokerage said the shares have rallied too far compared with other companies in its industry.
France Telecom SA surged 5.7 percent to 7.72 euros, its biggest rally in seven months. France’s largest phone company was raised to overweight, meaning that investors should buy the shares, from underweight at Morgan Stanley, which said the stock could rally 50 percent.
An index of European utilities rose to its highest level in a month. Veolia Environnement SA jumped 6 percent to 10.22 euros for the biggest gain on the gauge.
Repsol SA advanced 2.5 percent to 16.70 euros. The Spanish oil producer sold a 5.04 percent stake to Temasek Holdings Pte for 1.04 billion euros ($1.35 billion). Singapore’s state-owned investment company bought the treasury shares for 16.01 euros apiece in the country’s largest ever investment in Spain.