European Stocks Little Changed Amid U.S. Debt-Limit TalksJonathan Morgan
European stocks closed little changed at the highest level in almost two weeks as investors awaited developments in talks on raising the U.S. debt limit and restoring government operations.
Dassault Systemes SA, a French maker of design software, sank the most in five years as revenue missed its forecasts. Konecranes Oyj slid 2.3 percent as the Finnish maker of lifting equipment cut its outlook. PSA Peugeot Citroen tumbled the most in two years on a report it plans to sell new shares. Electricite de France SA rose 2.2 percent as the U.K. said it’s close to announcing a deal to build a nuclear power plant.
The Stoxx Europe 600 Index added 0.2 percent to 312.22 at the close of trading, erasing an earlier drop of as much as 0.4 percent. The gauge has advanced 0.6 percent in October even as U.S. lawmakers failed to agree on a budget, forcing the first partial government shutdown in 17 years. The world’s biggest economy will exhaust its borrowing authority on Thursday without action by Congress to increase the debt limit.
“Everyone expects the issue to be solved at the 11th hour, but no one knows when the 11th hour will be,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Asset Management in Copenhagen, said by phone. “We are seeing a dysfunctional U.S. government, which is creating uncertainty.”
National benchmark indexes climbed in 13 of the 18 western European markets. The U.K.’s FTSE 100 advanced 0.3 percent, while Germany’s DAX and France’s CAC 40 were little changed.
The volume of shares changing hands in Stoxx 600 companies today was 23 percent lower than the 30-day average, Bloomberg data show. The VStoxx Index, a gauge of volatility implied by the options market, climbed 10 percent to 20.16.
Democrats and Republicans held talks over the weekend on how to resolve the U.S. fiscal impasse before the government exhausts its borrowing authority. If that happens, the nation would run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
“The City’s traders have become increasingly accustomed to delayed trains, slow-running Undergrounds and increasingly miserable weather,” Alastair McCaig, a market analyst at IG in London, wrote in e-mailed comments. “Judging by the market’s reaction this morning, we can also add U.S. political indecision to the list.”
The Stoxx 600 has rallied 12 percent in 2013 as the euro area emerged from a recession and central banks maintained stimulus measures to support the global economy.
Dassault declined 11 percent to 86.24 euros today, the largest slide since October 2008. Revenue in the third quarter, excluding currency effects, rose 4 percent, falling short of targeted growth of 8 percent to 9 percent, according to a company statement.
Konecranes lost 2.3 percent to 23.75 euros in Helsinki as the company forecast that 2013 sales will be “slightly lower” than last year.
Peugeot plunged 9.1 percent to 11.25 euros, the biggest decline since August 2011. The carmaker is preparing to sell 3 billion euros ($4.1 billion) of new stock, with China’s Dongfeng Motor Corp. and the French government buying matching stakes in Europe’s second-biggest carmaker, Reuters reported, citing three unidentified people.
Ericsson AB, the largest maker of wireless-network equipment, retreated 2.1 percent to 82.95 kronor. Barclays Plc downgraded the shares to underweight, similar to a sell recommendation, from equal weight, saying third-quarter earnings may disappoint.
EDF advanced 2.2 percent to 25.05 euros as Energy Secretary Ed Davey said the U.K. is “extremely close” to announcing a deal with Europe’s biggest power generator to build Britain’s first nuclear power station since 1995. The agreement may be announced as soon as this week after two or three remaining issues are resolved, said a U.K. government official briefed on the talks.
Johnson Matthey Plc, the U.K. platinum refiner and producer of autocatalysts, climbed 5.9 percent to 2,987 pence as JPMorgan Chase & Co. upgraded the shares to overweight, similar to a buy rating.
“Johnson Matthey is at an inflection point,” Martin Evans, an analyst at JPMorgan, wrote in a report. “We expect years of investment in the industrial catalyst market to lead to accelerated growth, benefiting from the swathe of new customer capex driven by Chinese petrochemical self-sustainability and the U.S. shale-gas revolution.”