Europe Stocks Fall After Six-Year High on Ukraine TensionJonathan Morgan
European stocks plunged the most in more than a month, retreating after reaching a six-year high last week, as investor concern increased that the escalating tension in Ukraine will hurt corporate earnings.
Companies with exposure to Russia led losses, with Carlsberg A/S, owner of the country’s biggest brewer, falling the most in more than a year. Roche Holding AG slipped the most since August 2011 after a data monitoring committee advised it to end a trial of a lung-cancer drug. Bouygues SA slid 1.8 percent after a report that the French construction and telecommunications company may bid for Vivendi SA’s phone carrier SFR.
The Stoxx Europe 600 Index dropped 2.3 percent to 330.36 at the close of trading, its biggest decline since Jan. 24. Of the equity benchmark’s 600 members, 575 retreated, while 19 rose. The measure advanced 4.8 percent in February as Federal Reserve Chair Janet Yellen pledged to follow her predecessor’s policy on economic stimulus.
“The situation in the Ukraine will have a big impact on corporate earnings,” Robert Halver, head of capital-markets research at Baader Bank AG in Frankfurt, said in a telephone interview. “I see no quick solution to the problem. The energy supply to western Europe is at risk at the moment. There will be higher levels of volatility in the financial markets.”
The number of shares changing hands today in Stoxx 600-listed companies was 20 percent greater than the 30-day average, according to data compiled by Bloomberg based on volumes at this time of the day. The VStoxx Index, which measures expected volatility on the Euro Stoxx 50 Index using options prices, soared 30 percent to 21.86, its biggest jump since August 2011.
The standoff over Ukraine intensified over the weekend as Russian President Vladimir Putin got parliamentary approval to send troops into the country. The former Soviet state put its military on combat readiness as Russian-speaking forces arrived outside the Ukrainian infantry base at Privolnoye on the Crimean peninsula.
The U.S. warned Russia not to intervene in the region and raised the possibility of imposing sanctions. Secretary of State John Kerry travels to Ukraine today to offer support as Russian troops occupy the Black Sea region of Crimea. European Union foreign ministers are holding an emergency meeting, while the Group of Seven nations suspended planning for June’s Group of Eight summit in Russia.
“Our base scenario is that we don’t see an outright escalation,” Peter Garnry, an equity strategist at Saxo Bank A/S in Copenhagen, said in a telephone interview. “The grip on markets should be short lived. Investors are just selling out in the short term as a precautionary move.”
National benchmark indexes retreated in 17 of the 18 western-European markets today. The stock market in Athens was closed for a holiday. France’s CAC 40 lost 2.7 percent. Germany’s DAX slipped 3.4 percent, for its biggest drop since November 2011. The U.K.’s FTSE 100 declined 1.5 percent.
China’s Purchasing Managers’ Index for February fell to 50.2 from 50.5 in January, according to official data released on March 1. A number above 50 indicates expansion. A private PMI by HSBC Holdings Plc. and Markit Economics signaled contraction, slipping to 48.5 from 49.5.
An index of euro-area manufacturing output based on a survey of purchasing managers rose to 53.2 in February, compared with the preliminary estimate of 53, according to a final reading from Markit.
In the U.S., the Institute for Supply Management said its manufacturing index rose to 53.2 in February from 51.3 a month earlier. The median forecast of 81 economists surveyed by Bloomberg was 52.3.
Carlsberg, which owns Russia’s Baltika Breweries, slid 5.3 percent to 540.50 kroner.
Societe Generale SA fell 5.4 percent to 45.75 euros, for its biggest decline in almost a year. France’s second-largest lender said Feb. 12 that its international retail-banking business had 13.5 billion euros ($18.6 billion) of loans and 8.5 billion euros in deposits in Russia at the end of 2013.
Nokian Renkaat Oyj lost 6.6 percent to 30.35 euros. The Nordic region’s largest tiremaker got about 35 percent of its revenue from the Russian region in 2012, according to data compiled by Bloomberg.
Metro AG retreated 5.4 percent to 28.41 euros. Germany’s biggest retailer said on Jan. 20 that it plans to proceed with an initial public offering of its Russian cash and carry business to raise money for expansion.
Roche slipped 4.6 percent to 258.80 Swiss francs. Genentech, a unit of the world’s largest maker of cancer drugs, said an independent data monitoring committee recommended that it halt the Phase III METLung study of the lung cancer treatment because it hasn’t shown any clinical benefits.
Bouygues declined 1.8 percent to 28.70 euros. Chief Executive Officer Martin Bouygues met with French President Francois Hollande on Feb. 27 to seek government support for the purchase of SFR, Le Journal du Dimanche reported, citing people close to the CEO.
Kuehne & Nagel International AG lost 3.1 percent to 121.70 francs. The world’s biggest sea-freight forwarder reported 2013 earnings before interest and taxes rose 20 percent last year to 761 million francs ($865 million). Analysts had forecast 763.8 million francs.
A gauge of commodity producers on the Stoxx 600 declined the most since Jan. 24. ArcelorMittal SA, the world’s biggest steelmaker, slipped 4.1 percent to 11 euros. Rio Tinto Plc dropped 2.4 percent to 3,350.5 pence.
Gold rose to its highest price since September as the escalating tension between Russia and Ukraine spurred demand for the metal as a safe haven. Randgold Resources Ltd. added 4.3 percent to 4,953 pence. Fresnillo Plc, which produces gold and silver in Mexico, gained 1.9 percent to 970 pence.