Europe Stocks Fall to Six-Week Low on Syria ConcernCorinne Gretler
European stocks dropped to the lowest level in six weeks as concern grew that the U.S. will take military action against Syria.
Accor SA fell the most in more than 14 months after posting first-half profit that missed analysts’ estimates. Air France-KLM Group and Deutsche Lufthansa AG paced a decline among European travel and leisure companies. Bouygues SA jumped the most in six months after reporting a 10 percent increase in second-quarter profit.
The Stoxx Europe 600 Index lost 0.4 percent to 297.89 at the close of trading, its lowest level since July 17. The gauge fell as much as 1.1 percent in intraday trading. It has still advanced 8.1 percent since this year’s low on June 24 as the European Central Bank pledged to keep interest rates low.
“The key thing we are worried about regarding Syria, but also Egypt, is a sharp rise in oil prices and how it has a potential to be a bigger problem for emerging markets in particular and then, potentially the West” Norman Villamin, who helps oversee more than $40 billion as European chief investment officer at Coutts & Co. in Zurich, said in telephone interview. “This correction will create opportunities for those who are looking for more attractive entry levels.’”
The Stoxx 600 slid 1.8 percent yesterday after U.S. Secretary of State John Kerry said the U.S. will hold Syria accountable for using chemical weapons against its own people. The attack near Damascus last week killed as many as 1,300 people, according to opposition groups.
Oil climbed to a two-year high on concern the conflict in Syria may spread and threaten oil supplies from the Middle East. The U.S. and its allies are working to define goals for a military strike against Syria, according to a U.S. administration official who spoke on condition of anonymity. The U.K. will put forward a draft resolution authorizing action to protect civilians in Syria, Prime Minister David Cameron said.
In the U.K., Bank of England Governor Mark Carney said the central bank is prepared to boost stimulus if the U.K.’s economic recovery is hampered by investors’ expectations of high interest rates.
“The upward move in market expectations of where bank rate will head in future could, at the margin, feed into the effective financial conditions facing the real economy,” Carney said. “If they tighten, and the recovery seems to be falling short of the strong growth we need, we will consider carefully whether, and how best, to stimulate the recovery further.”
National benchmark indexes retreated in 12 of the 18 western European markets today. France’s CAC 40 lost 0.2 percent and Germany’s DAX dropped 1 percent. The U.K.’s FTSE 100 retreated 0.2 percent.
Italy’s FTSEMIB Index jumped 1 percent. Renato Brunetta, an ally of Silvio Berlusconi, said today Italy will cancel part of an unpopular property tax, easing concern the issue would cause Berlusconi’s party to withdraw from the governing coalition.
Accor dropped 4.4 percent to 27.52 euros, the biggest loss since June 2012. Europe’s largest hotel operator posted first-half earnings before interest and taxes of 198 million euros ($265 million), missing the average analyst projection of 212 million euros. The company predicted 2013 Ebit of between 510 million euros and 530 million euros, compared with the average 534 million-euro analyst estimate.
A gauge of European travel companies slumped to a two-month low, for the third-worst performance among the 19 groups in the Stoxx 600. Air France-KLM slid 2.9 percent to 5.74 euros and Lufthansa fell 3.2 percent to 13.49 euros.
Polymetal International Plc lost 5.8 percent to 698 pence as the Russian gold and silver miner posted a first-half net loss of $255 million, compared with a $157 million profit a year earlier.
Bouygues rallied 10 percent to 25.33 euros, the biggest gain since February. The French building, telecommunications and television company’s operating profit increased to 432 million euros from 394 million euros a year earlier. Analysts had forecast 358 million euros, according to the average of three estimates.
Separately, Bouygues cut its sales target for the full year to 33.2 billion euros to 33.4 billion euros. That compared with a previous forecast of 33.45 billion euros.
Statoil ASA rose 4.2 percent to 137.60 kroner. Norway’s biggest energy company made its third oil discovery off the coast of Canada in the Flemish Pass basin. Bank of America Corp. raised the stock to buy from neutral.
“The group’s ongoing commitment to exploration has replenished the portfolio and offered more flexibility to pick the best organic projects, meaning there is less of a trade off between growth targets versus sustaining returns,” Bank of America analysts including Matthew Yates wrote.
Vestas Wind Systems A/S advanced 5.5 percent to 104.90 kroner as Stoxx Ltd. said the company is among the 12 stocks that will be added to the Stoxx 600 as of Sept. 23.