Europe Stocks Decline to Lowest in Month With Retailers

European stocks fell to a five-week low, with a slump in Wm Morrison Supermarkets Plc leading retailers lower, while concern grew over the standoff between Russia and Ukraine.

Morrison plunged the most in 11 years after forecasting a profit decline. Adecco SA fell 6.6 percent after its largest investor sold a stake of about 16 percent in the world’s largest provider of temporary workers. Deutsche Lufthansa AG rallied 3.9 percent after it resumed dividend payments and maintained a target of tripling operating profit within two years.

The Stoxx Europe 600 Index lost 1.1 percent to 324.51 at the close of London trading after earlier gaining as much as 0.2 percent. That brought the gauge’s two-day drop to 2.1 percent, the most since January. The European index has fallen 4.1 percent from a six-year high reached Feb. 25.

“Investors will be selling everything with exposure to Russia ahead of what could be an explosive weekend,” said Eduardo Silva, a broker at X-Trade Brokers DM SA in Lisbon. “The focus is the vote in Crimea. It will be a provocative act that promises to roil the markets if international powers decide to intervene either diplomatically, politically, or militarily. There’s a lot of volatility in the markets.”

The VStoxx Index, which measures expected Euro Stoxx 50 Index volatility using options prices, surged 9.3 percent to 22.09 today, a five-week high.

Crimea Referendum

The U.S. and Germany stepped up pressure on Russia to back down from plans to annex Crimea from Ukraine as Western powers try to muster economic and diplomatic sanctions to force Russian President Vladimir Putin to defuse the situation. The region will hold a referendum in three days.

U.S. President Barack Obama, who met Ukraine’s interim Prime Minister Arseniy Yatsenyuk at the White House yesterday, said “the international community -- the European Union and others -- will be forced to apply a cost to Russia’s violations of international law and its encroachments on Ukraine.”

“Investors will be reluctant to take large positions before the weekend with the Crimea referendum,” said Jean-Paul Jeckelmann, who helps manage $1.5 billion in equities as chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland. “The background remains uncertain. We don’t know what the international reaction will be. Sanctions, military interventions will all weigh on markets.”

U.S. Data

A Commerce Department showed that sales at U.S. retailers climbed 0.3 percent in February, the first increase in three months, after a revised 0.6 percent drop in January. Economists in a Bloomberg News survey had called for a gain of 0.2 percent.

Separate data showed that initial jobless claims unexpectedly fell to 315,000 in the week ended March 8, the lowest level since November, from 324,000 in the earlier period. That compares with the 330,000 economists had predicted.

National benchmark indexes retreated in all of the 18 western-European markets today. France’s CAC 40 fell 1.3 percent and Germany’s DAX dropped 1.9 percent. The U.K.’s FTSE 100 lost 1 percent.

Morrison slumped 12 percent to 205.2 pence. The smallest of the U.K.’s four main grocers forecast a third straight decline in pretax profit and said it will sell 1 billion pounds ($1.7 billion) in property over the next three years. Earnings may drop to as little as 325 million pounds this year, the company said as it posted a 13 percent drop in underlying pretax profit for the year ended Feb. 2.

Retailers Fall

Delhaize Group fell 7.7 percent, the most since May 2012, to 48.69 euros after predicting lower profitability in Belgium. The owner of the Food Lion supermarkets reported fourth-quarter adjusted EBIT of 182 million euros ($253 million), trailing the 188 million-euro analyst projection.

Retailers in the Stoxx 600 lost 2.2 percent for the biggest drop among 19 industry groups. J Sainsbury Plc fell 8.5 percent to 304.9 pence and Tesco Plc dropped 5 percent to 298.8 pence.

Adecco lost 6.6 percent to 73.40 Swiss francs. Jacobs Holding AG sold 30.2 million shares for 71.50 francs each. Adecco jumped 4.5 percent yesterday after posting full-year profit that exceeded analysts’ estimates.

K+S AG dropped 9.9 percent, the most since July, to 22.10 euros. Europe’s largest potash supplier forecast a “significant” drop in earnings this year as prices for the crop nutrient and some crystallized salts remain lower.

Lufthansa advanced 3.9 percent to 18.61 euros. Europe’s second-largest airline said it will pay a dividend of 45 euro cents a share. Operating profit in 2013 fell to 697 million euros, exceeding the 662 million-euro average analyst estimate compiled by Bloomberg.

Royal Boskalis Westminster NV rose 2.9 percent to 37.37 euros. The Dutch dredging company said revenue in 2013 rose to a record 3.54 billion euros from 3.08 billion euros a year earlier, beating analyst projections. Net income climbed to 366 million euros last year from 249 million euros. The company said it will buy back as many as 10 million shares through 2016.

The volume of shares changing hands in Stoxx 600 companies was 13 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.