European Stocks Drop as Maersk, Valeo Fall on Stake SalesNamitha Jagadeesh
European stocks dropped to their lowest level in a month amid stake sales in companies from AP Moeller-Maersk A/S to Valeo SA, while Russia and Ukraine continued their standoff over Crimea.
Maersk and Valeo both retreated more than 2 percent. Tod’s SpA and G4S Plc lost more than 5 percent as they both reported 2013 earnings that disappointed analysts. Adecco SA climbed 4.5 percent after the world’s biggest supplier of temporary workers posted profit that exceeded analysts’ estimates.
The Stoxx Europe 600 Index declined 1.1 percent to 327.95 at the close of trading. The gauge has dropped 3.1 percent from its five-year high on Feb. 25 as Russia’s parliament granted President Vladimir Putin approval to use military force in Ukraine. The Russian-speaking region of Crimea holds a referendum on Sunday on whether to split from Ukraine.
“Markets are risk averse as we probably won’t see a decision on the Ukraine and Crimea problem this week,” Christian Stocker, a senior strategist at UniCredit Bank AG in Munich, said by phone. “All are focused on Sunday’s referendum and how the European governments will react to the outcome. Valuations in Europe are high and what we need for a further rally is new positive impulse from earnings.”
The Stoxx 600 trades at 14.3 times its estimated earnings, greater than its multiple of 13.8 times at the start of the year and the five-year average of 12.2 times projected profit, according to data compiled by Bloomberg.
The Group of Seven nations said today that they will not recognize the result of Crimea’s referendum. The U.S., Canada, France, Germany, Italy, the U.K. and Japan said they would take further action if Russia annexs Crimea following the plebiscite. Ukraine says Russia has as many as 19,000 troops on the peninsula. The regional parliament has brought forward to Sunday a planned referendum on whether to leave Ukraine.
The Russian Foreign Ministry said that U.S. aid to the acting government in Kiev would violate American law because the departure of Viktor Yanukovych as Ukraine’s president last month counts as a coup. Ukraine’s interim Prime Minister, Arseniy Yatsenyuk, meets U.S. President Barack Obama and Secretary of State John Kerry in Washington today. Yatsenyuk addresses the United Nations Security Council in New York tomorrow.
A Eurostat report showed that industrial production in the 18-nation euro zone dropped 0.2 percent in January. The average analyst forecast had called for an increase of 0.5 percent. The agency revised the decline in December to 0.4 percent.
National benchmark indexes fell in every western-European market except Luxembourg. France’s CAC 40 and the U.K.’s FTSE 100 lost 1 percent. Germany’s DAX slid 1.3 percent.
Maersk declined 3.2 percent to 62,850 kroner after the estate of the shipping company’s former chairman sold a 1.4 percent stake. Maersk Mc-Kinney Moller died in April 2012. His estate will use the proceeds of 3.55 billion kroner ($662 million) to pay taxes.
Valeo lost 2.1 percent to 99.03 euros after Bpifrance Financement SA sold about 1.98 million shares in France’s second-biggest auto-parts maker to institutional investors for 200 million euros ($278 million), according to a statement.
Tod’s dropped 5.1 percent to 94.15 euros after the Italian luxury-goods maker reported net income of 133.8 million euros for 2013. That missed the 138 million-euro average estimate of analysts surveyed by Bloomberg.
G4S slid 5.3 percent to 232.5 pence. Underlying earnings fell to 14.7 pence a share in 2013 from 15.8 pence in 2012, missing the 16.2 pence average of forecasts compiled by Bloomberg.
The world’s biggest provider of security services booked charges of 386 million pounds ($642 million) last year from restructuring and reviews of its contracts, assets and liabilities. The U.K.’s Justice Ministry announced an investigation last May into G4S’s billings under contracts for electronic monitoring that it holds with the department.
Gerresheimer AG slid 5.5 percent to 45.49 euros after Goldman Sachs Group Inc. lowered its recommendation on the maker of drug-delivery systems by two grades to sell from buy. The brokerage said the outlook for Gerresheimer’s returns has worsened and the company’s need for capital investment to generate growth will limit its free cash flow.
K+S AG dropped 2.1 percent to 24.52 euros after Europe’s biggest potash supplier proposed cutting its dividend by 82 percent to 25 euro cents a share and using part of the cash to pay for a new plant in Canada. The company, which sank 36 percent last year as potash prices fell, said it plans to return to a payout ratio of 40 percent to 50 percent of earnings.
Adecco gained 4.5 percent to 78.60 Swiss francs. The recruiter posted full-year earnings before interest and taxes of 779 million euros, beating the 765 million-euro average projection of analysts surveyed by Bloomberg.
Prudential Plc climbed 2.7 percent to 1,398 pence as the insurer reported operating profit of 2.95 billion pounds for 2013. That beat the median analyst projection of 2.83 billion pounds. It also raised its dividend to 33.57 pence a share.
The company extended its partnership in Asia with Standard Chartered Plc by 15 years, according to a statement.