European Stocks Fall as U.S. Payroll Data Miss Estimates

European stocks declined the most in five weeks, paring yesterday’s biggest rally for the region’s benchmark index in almost a month, as U.S. manufacturing activity fell faster than estimated, and companies in the world’s largest economy added fewer workers than forecast.

Vodafone Group Plc retreated 3.1 percent after Verizon Communications Inc. denied it’s considering a bid for the U.K. company. Kazakhmys Plc fell to its lowest price in four years as metal prices retreated. Rexel SA increased 1.9 percent in Paris after Goldman Sachs Group Inc. recommended buying the shares.

The benchmark Stoxx Europe 600 Index retreated 0.9 percent to 294.8 at the close of trading after climbing 1.3 percent yesterday on better-than-estimated U.S. factory orders data. The gauge has still advanced 5.4 percent this year, closing at its highest level since 2008 on March 14.

“We were certainly calling for a correction in developed markets,” Stewart Richardson, chief investment officer at RMG Wealth Management LLP, told Francine Lacqua on Bloomberg Television in London. “We worry there is a bit of a slowdown in terms of economic growth coming and certainly a continued slowdown in corporate earnings. When the market has moved as much as it has from autumn of last year, it is probably time for a bit of a pause.”

Stocks extended losses after data showed the Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers almost 90 percent of the economy, fell to 54.4 in March from 56 in the prior month. That fell short of economists’ median forecast for 55.5. Readings above 50 indicate expansion.

Payrolls Miss

A U.S. payrolls report from the ADP Research Institute showed companies added 158,000 workers in March, missing the median economist forecast for 200,000 additions. The data comes ahead of the Labor Department’s monthly non-farm payrolls report on Friday.

National benchmark indexes declined in 15 of the 18 western European markets. Germany’s DAX fell 0.9 percent, the U.K.’s FTSE 100 slid 1.1 percent, and France’s CAC 40 lost 1.3 percent.

Portugal’s PSI-20 Index plunged 3.5 percent, the most since November 2011. Lenders led declines, with Banco Espirito Santo SA, the nation’s largest, losing 8.8 percent.

Vodafone led a gauge of phone companies lower, falling 3.1 percent to 186.2 pence, after Verizon denied a Financial Times report that said it had discussed a plan with AT&T Inc. to make a joint offer for the U.K. telecommunications operator.

While Verizon reiterated interest in buying Vodafone’s stake in the companies’ Verizon Wireless joint venture, it doesn’t currently plan to bid for the whole company, according to a filing yesterday.

Telecommunications Downgrade

Telecom Italia SpA lost 5.4 percent to 53.6 euro cents and France Telecom SA retreated 4.4 percent to 7.66 euros after UBS AG downgraded both phone companies to sell from neutral late yesterday. Analysts cited downside earnings risk for Telecom Italia, and cost cutting by competitors for France Telecom.

A gauge of European commodity producers slipped 2 percent, for the second-biggest decline of the 19 industry groups on the Stoxx 600, as metals prices retreated. Kazakhmys lost 5.1 percent to 350.7 pence, extending the copper producer’s selloff since March 20 to 28 percent. Evraz Plc fell 6 percent to 203.5 pence and Eurasian Natural Resources Corp. dropped 4.6 percent to 224.6 pence.

Rexel climbed 1.9 percent to 17.69 euros after Goldman Sachs raised its recommendation for the French electric equipment distributor to buy from neutral, citing an acceleration in the U.S. commercial market.

Neste Oil

Neste Oil Oyj gained 4.8 percent to 12.04 euros. CA Cheuvreux SA upgraded Finland’s only refiner to outperform, the equivalent of a buy recommendation, from underperform, saying it expects it to report resilient first-quarter results this month.

Pennon Group Plc added 4.1 percent to 650.5 pence as the U.K.’s Daily Mail cited speculation that Abu Dhabi Investment Authority may be interested in the British water company. The newspaper didn’t identify its sources.

Panalpina Welttransport Holding AG soared 15 percent to 96.55 Swiss francs after the freight-forwarding company appointed Peter Ulber as chief executive officer, replacing Monika Ribar.

The volume of shares changing hands on the Stoxx 600 today was 6.5 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.