European Stocks Drop Most in Nine Weeks on Syria TensionTom Stoukas
European stocks slid the most in nine weeks after U.S. Secretary of State John Kerry said the Obama administration will hold Syria accountable for using chemical weapons against its own people.
Renault SA and Porsche SE decreased more than 4 percent as a gauge of carmakers posted the biggest decline of 19 industry groups on the Stoxx Europe 600 Index. Every lender in the Stoxx 600 Banks Index fell. Italian and Spanish lenders slid the most as yields on the two nations’ benchmark bonds increased.
The Stoxx 600 slid 1.8 percent to 299.01 at the close in London. The equity benchmark has still rallied 8.5 percent from this year’s low on June 24 as the European Central Bank said that interest rates will remain low for an extended period.
“The Kerry statement increases fears of an escalation of the Syrian conflict and negative spillover effects to the whole region, shaking investor sentiment,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Pension A/S in Copenhagen, wrote in an e-mail. “Policy risks are the dominating issue and we are heading into a true minefield of risk events over the coming weeks.”
The Stoxx 600 fell yesterday after Silvio Berlusconi’s People of Liberty party threatened to withdraw its support from Italy’s coalition government if the country’s Senate votes to remove the billionaire former prime minister. The senators will discuss Berlusconi’s case from Sept. 9.
The Federal Reserve holds its next meeting on Sept. 17-18. The central bank will decide to reduce its $85 billion of monthly asset purchases at the meeting, according to the median estimate of economists surveyed by Bloomberg on Aug. 9-13.
Secretary of State Kerry denounced an attack on a suburb of Damascus last week, saying it required a response against Syrian President Bashar al-Assad’s regime.
“The indiscriminate slaughter of civilians, the killing of women and children and innocent bystanders by chemical weapons, is a moral obscenity,” Kerry told reporters in Washington after the close of European markets yesterday.
The volume of shares changing hands in companies listed on the Stoxx 600 today was 21 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.
National benchmark indexes declined in every western-European market today. Germany’s DAX lost 2.3 percent and France’s CAC 40 dropped 2.4 percent. The U.K.’s FTSE 100 slid 0.8 percent, while Greece’s ASE tumbled 4.1 percent.
Renault and Porsche fell 4.7 percent to 56.45 euros and 4.1 percent to 64.70 euros, respectively. The preferred shares of Volkswagen AG, Europe’s largest carmaker, slid 3.2 percent to 176.35 euros. Daimler AG, the third-biggest maker of luxury vehicles, slipped 4.8 percent to 52.89 euros. Bayerische Motoren Werke AG, the biggest, decreased 3.2 percent to 73 euros.
UniCredit SpA and Intesa Sanpaolo SpA, Italy’s two largest lenders, dropped 4.2 percent to 4.23 euros and 4.4 percent to 1.45 euros, respectively. The yield on benchmark 10-year Italian bonds climbed seven basis points to 4.45 percent. Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s two biggest banks, slid 3.7 percent to 5.41 euros and 3.7 percent to 7.25 euros, respectively. The yield on 10-year Spanish debt rose four basis points to 4.50 percent.
Antofagasta Plc retreated 3.3 percent to 884.5 pence. The copper producer controlled by Chile’s Luksic family said in a statement that net income declined to $395 million from $646.1 million a year earlier. Sales slipped 12 percent to $2.78 billion in the six months through June as metal prices declined.
ThyssenKrupp AG fell 3.1 percent to 15.82 euros. Nomura Holdings Inc. downgraded Germany’s largest steelmaker to neutral from buy. The brokerage said that the shares will probably not rally because the Brazilian real has weakened against the euro. ThyssenKrupp’s Steel Americas unit owns a steel mill in the Brazilian state of Rio de Janeiro.
Polymetal International Plc tumbled 8.5 percent to 741 pence. HSBC Holdings Plc downgraded the Russian gold-and-silver producer to neutral from overweight, meaning that investors should no longer hold more of the shares than are represented in benchmark indexes. The brokerage said that Polymetal will probably report lower adjusted earnings when it releases its first-half results tomorrow.
UBM Plc added 1.4 percent to 711.5 pence. UBS upgraded the the publisher of InformationWeek to buy from neutral. The brokerage increased its forecasts for UBM’s events business.
Petrofac Ltd. jumped 8.5 percent to 1,373 pence, its largest rally in four years, after the oil-services provider reported first-half profit that beat analysts’ estimates. The company also raised its dividend.
Fresnillo Plc, a producer of gold and silver, surged 7.1 percent to 1,310 pence, its highest price since April, as precious metals rose. Randgold Resources Ltd. gained 4.1 percent to 5,335 pence.