European Stocks Drop as Technology Shares Fall; Altice UpCorinne Gretler
European stocks fell from a six-year high, posting their biggest decline in a month, as shares of technology companies tumbled.
Technology shares lost 2 percent, the most among 19 industry groups in the benchmark gauge, with United Internet AG falling 4.3 percent and ARM Holdings Plc dropping 2.4 percent. Osram Licht AG slid the most since it started trading after its spinoff from Siemens AG as Berenberg Bank lowered its rating. Altice SA jumped 11 percent, while Bouygues SA slumped the most since August 2012, after Vivendi SA agreed to sell its phone unit SFR to Altice in a deal valued at more than 17 billion euros ($23.3 billion).
The Stoxx 600 fell 1.2 percent to 334.96 at the close of trading. The Nasdaq Composite Index declined 2.6 percent on April 4 for its biggest drop in two months, with shares from Google Inc. to Yahoo Inc. plunging as investors sold the bull market’s biggest winners.
“The favorites of the past few months, such as technology and biotechnology stocks, seem to be losing some of the glamor,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “There are some big question marks around the fair valuation of these shares, hence we’re seeing a bit of a shift into more defensive stocks.”
The Stoxx 600 dropped today after nine straight days of gains amid merger and acquisition activity and as U.S. payrolls and manufacturing increased optimism that the world’s largest economy is strengthening. It rose on April 4 to the highest level since January 2008.
National benchmark indexes retreated in all western-European markets today except Iceland. France’s CAC 40 and the U.K.’s FTSE 100 fell 1.1 percent each, while Germany’s DAX slid 1.9 percent.
Technology shares in the Stoxx 600 rallied 128 percent from their low in March 2009 through a six-year high on April 2, beating the 111 percent increase for the broader equity index. The Stoxx 600 Technology Index traded at 20.5 times estimated earnings at the end of last week, compared with 14.8 for the broader gauge.
United Internet declined 4.3 percent to 34.06 euros, and ARM Holdings lost 2.4 percent to 972.5 pence. Iliad SA slid 5.5 percent to 198.60 euros.
Osram Licht retreated 7.1 percent to 44.20 euros. Berenberg Bank cut the lighting manufacturer to hold from buy, meaning it no longer recommends acquiring shares. The brokerage said the transition to LED light may create more of a headwind than originally predicted for the lamps and luminaries unit.
Altice jumped 11 percent to 33.60 euros, while Bouygues lost 6 percent to 29 euros. Cable billionaire Patrick Drahi’s Altice will pay 13.5 billion euros in cash and give Vivendi 20 percent of the company created from a merger of its Numericable Group with SFR. Vivendi will receive an extra 750 million euros if earnings targets are met, the companies said in separate releases. Vivendi added 0.3 percent to 20.62 euros.
Bouygues had increased its bid for the unit, offering 15.5 billion euros in cash and a 5 percent stake of an entity from combining SFR with Bouygues Telecom.
Alfa Laval AB gained 1.1 percent to 179.50 kronor. The maker of heat exchangers agreed to buy Norwegian pumpmaker Frank Mohn AS for 13 billion kroner ($2.2 billion) in cash to capture spending in offshore oil and gas drilling.
Technip SA added 1.5 percent to 74.27 euros after WSP Global Inc. said it agreed to buy the French company’s building and infrastructure-engineering unit. WSP, which did not specify the terms of the deal, said the acquisition will be completed around the end of the month.
The volume of shares changing hands in Stoxx 600 companies was 19 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.