Europe Stocks Drop for Fourth Day on Greek Government Row

European stocks fell, with the Stoxx Europe 600 Index posting its biggest weekly decline in 13 months, as Greek Prime Minister Antonis Samaras lost one of his two coalition partners and investors weighed the outlook for Federal Reserve stimulus measures.

National Bank of Greece SA plunged 11 percent as Greek stocks tumbled the most since October. SAP AG lost 2.7 percent after U.S. peer Oracle Corp. forecast quarterly profit at the lower end of analysts’ projections. Groupe Eurotunnel SA slipped 6.5 percent as brokers cuts their ratings on the stock.

The Stoxx 600 fell 1.2 percent to 280.4 at the close of trading. The equity benchmark retreated 3.7 percent this week, its fifth weekly decline, and the longest streak of losses in two years, as the Fed said it may end bond purchases next year if the economy strengthens in line with forecasts. The gauge has pared its yearly gain to 0.3 percent.

“The Greek party leaving the coalition today won’t do much to help uncertainty,” Tobias Britsch, who helps oversee the equivalent of $34 billion as European equities asset manager at Meriten Investment Management GmbH, said by phone from Dusseldorf, Germany. “I don’t see Greece being a problem like last year. New elections could be a bigger issue. The impact of reduced Fed liquidity will continue to worry markets.”

In Greece, the Democratic Left party withdrew its ministers from the coalition government amid disagreement over Samaras’s decision to close the nation’s public broadcaster. The departure of the party’s 14 lawmakers would leave the premier with a parliamentary majority of only three seats.

Democratic Left leader Fotis Kouvelis said he believes Greece doesn’t need new elections and will support efforts to keep the country in the euro, according to a statement read out on Athens-based Skai TV.

National Indexes

National benchmark indexes fell in 14 of the 16 western European markets open today. The U.K.’s FTSE 100 slipped 0.7 percent and France’s CAC 40 lost 1.1 percent, while Germany’s DAX tumbled 1.8 percent. Greece’s ASE Index slid 6.1 percent, its biggest loss since October. Markets in Helsinki and Stockholm were closed for the Midsummer’s Eve public holiday.

The volume of shares traded in companies listed on the Stoxx 600 was 52 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

In China, benchmark money-market rates tumbled from record highs after the central bank injected funds to alleviate the worst cash crunch in at least a decade. The People’s Bank of China added funds to the financial system via short-term liquidity operations yesterday, according to Hao Hong, chief China strategist at Bank of Communications Co. in Hong Kong.

Bank Supervision

European Union finance ministers met today in Luxembourg to discuss proposals for bank supervision, focusing on laws for the resolution of failed banks.

The European Central Bank probably won’t take over as euro-area bank supervisor until the end of 2014, in part because of German approval procedures, according to two European officials who spoke on condition of anonymity. This contrasts with an initial goal of moving to the new system in March, later pushed back to July.

National Bank of Greece fell 11 percent to 3.25 euros, while bookmaker OPAP SA decreased 5.2 percent to 6.35 euros.

SAP AG declined 2.7 percent to 55.10 euros. Oracle, the largest maker of database software, late yesterday posted quarterly sales that missed estimates and forecast profit for the current quarter at the lower end of analysts’ projections.

Groupe Eurotunnel, which operates the tunnel connecting England and France, dropped 6.5 percent to 5.14 euros, the lowest price since January 2012, as Natixis and RBC Capital Markets LLC cut their ratings on the stock.

Natixis cited regulatory risk for the company after the European Commission sent a formal request to France and the U.K. to comply with EU rules on rail fees.

Danone, which owns the Evian water brand, rallied 2 percent to 56.23 euros. JPMorgan Chase & Co. raised the stock to overweight, similar to a buy rating, from neutral, with analyst Celine Pannuti predicting earnings-per-share growth of 10 percent from next year.

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