European Stocks Drop to Their Lowest Level in Six Weeks

European stocks retreated to their lowest level in six weeks as investors weighed comments by Federal Reserve policy makers on when to scale back the central bank’s bond-buying program.

Tesco Plc slid the most in 16 months after the U.K.’s largest retailer reported same-store sales that fell short of analysts’ estimates. Carrefour SA lost 4.1 percent after HSBC Holdings Plc recommended that investors sell the French retailer’s shares. Man Group Plc plunged 17 percent after reporting a decline in the net assets of its flagship fund.

The Stoxx Europe 600 Index dropped 1.5 percent to 295.12 at the close of trading, its lowest level since April 24. The gauge has still gained 5.5 percent so far this year, reaching its highest level in more than five years last month, as the Fed maintained its quantitative-easing program.

“It’s very much sentiment about QE, because that is going to be the key thing that will impact the markets,” Daniel Morris, a market strategist at JPMorgan Asset Management, told Mark Barton on Bloomberg Television in London. “If we do think, because of stronger payrolls numbers, that QE is going to slow down sooner than expected, you will see a bit of short-term weakness in the market because of losing that liquidity.”

The volume of shares changing hands on the Stoxx 600 was 11 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

Bond Buying

Fed Bank of Kansas City President Esther George urged the Fed yesterday to slow its bond-buying program. George has dissented against the latest round of asset purchases at every policy meeting this year. Fed Bank of Dallas President Richard Fisher called for the central bank to reduce its purchases of mortgage bonds because the housing market has improved.

Economists at Deutsche Bank AG predicted yesterday that the Fed may start winding down its bond-buying program at its September meeting, even if this week’s non-farm payrolls report falls short of forecasts.

The Labor Department publishes its employment report for May this Friday. The release will show that the world’s largest economy created 167,000 jobs last month, according to the median estimate of economists surveyed by Bloomberg.

National benchmark indexes declined in every western-European market that opened today, except for Greece. Denmark was closed for a public holiday. The U.K.’s FTSE 100 lost 2.1 percent, France’s CAC 40 slid 1.9 percent and Germany’s DAX retreated 1.2 percent.

Tesco, Carrefour

Tesco declined 5.2 percent to 345.6 pence after reporting that U.K. same-store sales, which exclude gasoline and value added tax, declined 1 percent in the 13 weeks ended May 25. The average estimate of 14 analysts in a Bloomberg survey had called for a drop of 0.7 percent. Sales rose 0.5 percent in the previous quarter.

Carrefour slid 4.1 percent to 21.47 euros after HSBC downgraded France’s biggest retailer to underweight, which is similar to a sell recommendation, from neutral. The brokerage said the company’s profit in Europe may trail estimates as sales fall in Spain, Italy and Poland.

Man Group plunged 17 percent to 97.1 pence after reporting that the net-asset value of its A Man AHL Diversified fund decreased 6.1 percent last week. UBS AG also lowered its recommendation on the shares to neutral from buy. The brokerage said that the fund’s recent performance will cut earnings.

Meda Sinks

Meda AB dropped 8.1 percent to 80.25 kronor, its biggest tumble in 15 months, after the maker of the Dymista allergy medicine said it has not held talks to merge with another drugmaker. The shares climbed to their highest price in more than 5 1/2 years yesterday after the Wall Street Journal reported that Sun Pharmaceutical Industries Ltd. discussed an almost $5 billion takeover of Meda on May 31.

Elekta AB jumped 6.8 percent to 106.90 kronor. The Swedish manufacturer of radiation-surgery equipment forecast that full-year sales will climb more than 10 percent for the financial year ending in 2014, with most of the growth coming from emerging markets. The company said it broke its own delivery records in the fourth quarter. It also reported full-year earnings that were in line with analysts’ estimates.

Voestalpine AG rallied 7.6 percent to 27.28 euros, for the biggest advance on the Stoxx 600. Austria’s biggest steelmaker proposed to increase its dividend by 13 percent to 90 cents a shares. It also reported that net income jumped to 444.9 million euros ($582 million) in the year through March.

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