European Stocks Extend Drop as U.S. Housing Data MissesJonathan Morgan
European stocks dropped, snapping their biggest three-day rally since June, as sales of new houses in the U.S. unexpectedly plunged in March to an eight-month low and investors weighed manufacturing data from China to America.
Scania AB declined the most since October 2011 after a shareholder rejected Volkswagen AG’s offer for the remaining shares in the truckmaker. Royal Vopak NV plunged to its lowest price since November 2011 after saying profit may fall 5 percent to 10 percent this year. Associated British Foods Plc advanced the most in 14 years as its Primark chain posted a 26 percent increase in first-half profit and planned a U.S. entry.
The Stoxx Europe 600 Index fell 0.6 percent to 335.05 at the close of trading. The benchmark gauge had gained 3.2 percent in the past three days amid increased mergers-and-acquisitions activity and better-than-estimated U.S. data.
“The U.S. housing and the manufacturing PMI numbers came in below estimates,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “We are now down across the board. After yesterday’s rally, it looks so far just like a small consolidation before indexes should move higher again to test this year’s highs.”
Sales of new American houses dropped 14.5 percent to a 384,000 annualized pace, lower than forecasts of all economists surveyed by Bloomberg and the weakest since July, Commerce Department data showed. The median forecast of 74 economists surveyed by Bloomberg News called for the pace to accelerate to 450,000.
The Markit Economics preliminary U.S. manufacturing index decreased to 55.4 in April from a final reading of 55.5 a month earlier, the London-based group said. A reading above 50 for the purchasing managers’ measure indicates expansion. The median forecast in a Bloomberg survey of 19 economists was 56.
Separate data released earlier showed euro-area manufacturing expanded for a 10th consecutive month, while Chinese manufacturing contracted for a fourth month.
National benchmark indexes declined in 15 of 18 western-European markets today. France’s CAC 40 retreated 0.7 percent and Germany’s DAX lost 0.6 percent. The U.K.’s FTSE 100 slipped 0.1 percent.
Scania dropped 5.5 percent to 173 kronor. Alecta, which owned 2.04 percent in the Swedish truckmaker as of March 31, said Volkswagen’s offer does not fully reflect Scania’s long-term fundamental value.
Royal Vopak tumbled 7.8 percent to 38.58 euros. The Rotterdam-based tank-storage provider said challenging business circumstances may pull down 2014 earnings before interest, taxes, depreciation and amortization by 5 percent to 10 percent from 753 million euros ($1.04 billion) last year. ING Groep NV called the guidance a “negative surprise.”
Ericsson AB slid 6.1 percent to 80.95 kronor. The world’s biggest maker of wireless networks reported sales that missed analysts’ estimates. Ericsson said first-quarter revenue dropped about 9 percent to 47.5 billion kronor ($7.2 billion).
AB Foods jumped 8.8 percent to 2,962 pence, its largest gain since March 2000. The company’s Primark clothing-retail business posted first-half operating profit of 298 million pounds ($500 million). The chain will open a store in northeast U.S. next year and is in talks to open more outlets in that country by 2016, the company said.
Banca Monte dei Paschi di Siena SpA rose 3.1 percent to 25.03 euro cents. Goldman Sachs Group Inc. upgraded the stock to neutral from sell.
Thomas Cook Group Plc advanced 2.5 percent to 178 pence. Barclays Plc upgraded Europe’s second-largest tour operator to overweight, the equivalent of a buy rating, from underweight, or sell, citing the company’s success in restructuring its business.
Trelleborg AB climbed 4.1 percent to 138.40 kronor, its highest price since at least 1989 according to data compiled by Bloomberg. The maker of anti-vibration systems for the automotive industry reported operating profit, excluding one-time items, of 779 million kronor, exceeding estimates of 713 million kronor.