European Stocks Drop Before Fed Meeting; CGG, Rexel Fall

European stocks retreated, following their biggest rally in two months, as investors awaited the outcome of a two-day Federal Reserve meeting starting today.

CGG SA, the largest seismic surveyor of oilfields, fell the most on the benchmark index after cutting its 2013 earnings target. Rexel SA lost 1 percent as Ray Investment SARL sold a 7 percent stake in the company. Zurich Insurance Group AG climbed

1.9 percent after naming Swiss Re Ltd.’s George Quinn as its new chief financial officer.

The Stoxx Europe 600 Index dropped 0.7 percent to 311.31 at the close of trading. The measure added 1.3 percent yesterday after euro-area manufacturing rose more than forecast. It has fallen 4.3 percent this month as better-than-estimated U.S. economic data led some investors to speculate the Fed will decide to slow bond purchases as early as this week.

“We continue to see some market correction potential before we re-enter into a positive market environment that is fundamentally supported,” said Anja Hochberg, the chief investment officer for Europe and Switzerland at Credit Suisse Group AG in Zurich. “Market participants are eagerly awaiting this week’s Fed decision and the accompanying communication regarding tapering and further guidance to make sure people understand that tapering is not tightening.”

About 34 percent of economists surveyed by Bloomberg on Dec. 6 predicted that the Fed will start paring its $85 billion of monthly bond purchases when it concludes the two-day policy meeting tomorrow.

German Confidence

German investor confidence increased for a fifth month in December. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 62 from 54.6 in November. Economists predicted an increase to 55, according to the median of 35 estimates in a Bloomberg News survey.

National benchmark indexes retreated in 15 of the 18 western-European markets today. France’s CAC 40 slid 1.2 percent, Germany’s DAX lost 0.9 percent and the U.K.’s FTSE 100 fell 0.6 percent.

CGG plunged 17 percent to 12.04 euros, its biggest drop since October 2008, after cutting its 2013 earnings before interest and taxes target to $400 million to $420 million from a previous projection of $470 million. The company said market conditions remain difficult and that clients continue to delay large projects.

A gauge of oil and gas-related companies posted the third-worst performance of the 19 industry groups on the Stoxx 600. Petroleum Geo-Services ASA declined 4.7 percent to 65.10 kroner, while Technip SA slipped 4.5 percent to 67 euros.

BP Falls

BP Plc fell 1.7 percent to 465 pence. The Financial Times reported that lawyers representing businesses seeking compensation for losses incurred from the 2010 Gulf of Mexico spill said the oil company attempted to mislead the court when it won an injunction earlier this month on payments to some claimants. The report cited BP as saying it stood by its evidence.

Rexel retreated 1 percent to 18.25 euros. Ray Investment said it completed the sale of 20 million shares in the electrical-equipment distributor at 17.90 euros apiece.

DKSH Holding AG, which advises businesses on how to grow in Asia, lost 3.8 percent to 65.60 francs, its lowest price in a year. Credit Suisse Group AG downgraded the stock to underperform from neutral, meaning investors should sell the shares, and lowered its price estimate by 28 percent to 60 francs. Credit Suisse said protests and political changes in Thailand, where DKSH generated 36 percent of its revenue in 2012, could disrupt business and damp demand.

Dixons Drops

Dixons Retail Plc, the U.K.’s largest electronics retailer, slid 5 percent to 48.73 pence, its biggest drop since June 24, after saying it expects the second half of the year to be more challenging than the first six months.

Zurich Insurance rose 1.9 percent to 248 Swiss francs. The insurer had been seeking a CFO since the suicide of Pierre Wauthier in August. Vibhu Sharma has been filling the position on an interim basis. Quinn will leave Swiss Re at the end of April.

“The appointment of George Quinn appears as a sensible move for both sides,” Stefan Schuermann, an analyst at Vontobel Holding AG, wrote in a note to clients. “He is well regarded in the investment community and brings along the required experience to take over the CFO position at the globally active Zurich Insurance Group.”

Actelion Ltd. advanced 2.4 percent to 72 francs. UBS AG added the biotechnology company to its most preferred list, citing recent declines as a buying opportunity amid optimism on the opportunities for its Opsumit lung drug. Actelion fell 9.1 percent through yesterday since reaching a record on Nov. 27.

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