European Stocks Decline Amid Speculation of Fed TaperingJonathan Morgan
European stocks fell for a second day, following Asian shares lower, amid speculation the Federal Reserve will curb its bond-buying program as soon as next month.
BHP Billiton Ltd. lost 1.7 percent after posting full-year net income that missed analyst forecasts. Glencore Xstrata Plc slid 1.6 percent after writing down $7.7 billion of assets, even as it posted first-half adjusted net income that beat analyst predictions. Lindt & Spruengli AG rose to its highest price since November 2007 as the world’s largest maker of premium chocolate reported earnings before interest and taxes that exceeded estimates.
The Stoxx Europe 600 Index lost 0.8 percent to 302.25 at the close of trading, its lowest level since July 31. The equity benchmark has fallen 2.7 percent from its peak this year on May 22 as Fed Chairman Ben S. Bernanke said the U.S. central bank could pare stimulus measures if the economy improves in line with its forecasts.
“Markets are definitely more jittery and it seems to be a regurgitation of the Fed tapering concerns,” James Butterfill, who helps manage about $44 billion as head of global equity strategy at Coutts & Co. in London, said in a telephone interview. “We’ve got the Fed minutes tomorrow. The balance of probabilities is swinging towards a tapering announcement in September rather than December but the timing still remains inconclusive in our view.”
Investors will study the minutes of the Federal Open Market Committee’s July 30-31 meeting for signs of when it will begin to reduce the $85 billion pace of monthly bond purchases. The minutes may also describe the risks from inflation staying below the central bank’s 2 percent goal.
Officials will probably begin to reduce the buying next month, according to 65 percent of economists surveyed by Bloomberg on Aug. 9-13. The FOMC holds its next two-day meeting on Sept. 17-18.
Stocks in Asia slid, with the regional benchmark gauge falling to its lowest level in six weeks after metals prices declined for the first time in five days. All 10 industry groups on the MSCI Asia Pacific Index fell.
“Asian markets are concerned that the Fed stimulus package will be phased out, which led to a strong decline in the markets today,” Roger Peeters, chief executive officer at Close Brothers Seydler Research in Frankfurt, wrote in an e-mail.
The volume of shares changing hands in Stoxx 600 companies was 9.4 percent higher than the 30-day average, according to data compiled by Bloomberg.
National benchmark indexes dropped in 17 of the 18 western European markets. France’s CAC 40 Index slipped 1.4 percent, Germany’s DAX Index lost 0.8 percent and the U.K.’s FTSE 100 Index fell 0.2 percent.
BHP Billiton retreated 1.7 percent to 1,923.5 pence. The world’s biggest mining company said full-year profit slumped 30 percent after prices declined. Net income dropped to $10.9 billion in the year to June 30 from $15.4 billion a year ago. Profit, excluding one-time items, of $11.8 billion missed the $12.7 billion median forecast of analyst surveyed by Bloomberg.
Glencore Xstrata dropped 1.6 percent to 297.15 pence. The world’s biggest exporter of power station coal said first-half profit slid 39 percent and it wrote down the value of assets acquired in the Xstrata Plc takeover by $7.7 billion.
Adjusted net income fell to $2.04 billion from $3.36 billion a year earlier, Glencore said. That still beat the $1.87 billion average estimate of six analysts surveyed by Bloomberg.
Building-material companies fell as CRH Plc cut its earnings forecast.
CRH declined 2.2 percent to 1,394 pence in London. The construction-materials company said it expects second-half earnings before interest, taxes, depreciation and amortization to be in line with last year. In May, it forecast earnings to beat last year’s.
Holcim Ltd., the world’s largest maker of cement, dropped 2.1 percent to 66.30 Swiss francs. HeidelbergCement AG, the third biggest, slid 2.5 percent to 54.42 euros.
Deutsche Wohnen AG slipped 4.7 percent to 13.49 euros after it offered to buy GSW Immobilien AG in an all-share transaction that would create the second-largest owner of German homes. GSW jumped 6.3 percent to 33.45 euros, its highest price in almost three months.
Lindt gained 2.2 percent to 43,160 Swiss francs. The chocolate maker raised its profitability forecast after reporting first-half earnings that beat estimates as improving economic growth boosted consumption.
The operating-margin increase this year will be near the upper end of a targeted 0.2 percentage-point to 0.4 percentage-point range. First-half net income rose 40 percent to 48.8 million Swiss francs ($53 million), beating the 44.3 million-franc average of five analyst estimates compiled by Bloomberg.
Straumann Holding AG climbed 8.5 percent to 166 francs, its highest price since February 2012, after it said it doesn’t expect full-year revenue to exceed last year’s level. The world’s biggest manufacturer of dental implants reported Ebit for the first half of this year of 56.8 million francs compared with 54.6 million francs a year earlier.
Ladbrokes Plc advanced 3.1 percent to 197.5 pence after Deutsche Bank AG upgraded the U.K. gambling operator to buy from hold. The company has addressed operational issues including inadequate sports trading capabilities and weak client risk management, according to Deutsche Bank, which forecast medium-term online-market gains, strong cash generation and a recovery in group earnings before interest and taxes.