European Stocks Little Changed Before Fed Policy DecisionJonathan Morgan
European stocks were little changed from a three-week high, as a report showing U.S. economic growth stalled offset better-than-forecast jobs data, while investors awaited a Federal Reserve decision on monetary policy.
Banco Bilbao Vizcaya Argentaria SA slipped 1.1 percent after reporting a drop in first-quarter profit. BNP Paribas SA fell 3.2 percent after saying it may need to pay much more than the $1.1 billion it set aside for alleged U.S. sanctions breaches. Alstom SA jumped 9.3 percent as General Electric Co. made a 12.4 billion-euro ($17.2 billion) bid for the French company’s energy business.
The Stoxx Europe 600 Index retreated 0.1 percent to 337.89 at the close of trading, paring its monthly advance to 1.1 percent. The benchmark measure rose yesterday to its highest level since April 4 as companies from Deutsche Bank AG to Statoil ASA climbed on better-than-expected earnings.
“Investors are searching for some signposts regarding the economic backdrop and even in light of relatively low expectations, the U.S. GDP number was a disappointment,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Asset Management in Copenhagen, said in phone interview. “This has dampened risk sentiment slightly. In 2014 the markets have an expectation that the U.S. will be the bright spot in the world economy and this number puts a question mark on this.”
U.S. economic growth stagnated in the first quarter, figures from the Commerce Department showed today in Washington. Gross domestic product grew at a 0.1 percent annualized rate from January through March. The median forecast of economists surveyed by Bloomberg called for a 1.2 percent increase.
Companies in the U.S. boosted payrolls by 220,000 in April, according to a report from the ADP Research Institute. The median forecast of economists surveyed by Bloomberg News called for an advance of 210,000.
Fed policy makers will probably cut the pace of monthly bond buying to $45 billion at the two-day meeting that concludes today, according to the median of economists’ estimates compiled by Bloomberg News.
National benchmark indexes advanced in 10 of 18 western-European markets. The U.K.’s FTSE 100 added 0.2 percent, Germany’s DAX rose 0.2 percent, while France’s CAC 40 declined 0.2 percent.
BBVA slipped 1.1 percent to 8.85 euros. Spain’s second-biggest bank said first-quarter net income fell to 624 million euros from 1.73 billion euros a year earlier as Venezuela’s devaluation hit South American earnings and one-time gains weren’t repeated.
BNP Paribas lost 3.2 percent to 54.11 euros. France’s largest bank had set aside $1.1 billion related to a review of payments to parties subject to U.S. economic sanctions. BNP said today that talks took place in the first quarter and it “can’t be excluded” that the amount required could be significantly larger than originally provisioned.
Daimler AG fell 1.6 percent to 66.73 euros after posting first-quarter net income of 1.03 billion euros. Analysts had forecast 1.1 billion euros. Profit at the Mercedes cars division was 7 percent of sales, trailing some analyst estimates and below the company’s long-term target of 10 percent.
Osram Licht AG slid 9 percent to 37.73 euros. The lighting manufacturer that was spun off from Siemens AG said second-quarter revenue fell to 1.28 billion euros from 1.32 billion euros a year earlier, and its full-year sales-growth target of about 3 percent has become more challenging because of a decline in the lamp market.
Royal Dutch Shell Plc gained 2.9 percent to 2,347 pence. Europe’s biggest oil company said first-quarter profit excluding one-time items and inventory changes fell to $7.3 billion from $7.5 billion a year earlier. That still beat the $5 billion average estimate of analysts surveyed by Bloomberg.
Yara International ASA rose 5.3 percent to 280.6 kroner. The nitrogen-fertilizer maker reported earnings before interest, taxes, depreciation and amortization, excluding special items, of 3.83 billion kroner ($640 million), exceeding analysts’ estimates of 3.26 billion kroner.
Alstom soared 9.3 percent to 29.52 euros, its highest price in almost a year. Alstom’s board named a committee of independent directors to study the binding offer from GE by June 2, with exclusive talks to follow if that plan wins support, the companies said today.
Rolls-Royce Holdings Group Plc advanced 2.8 percent to 1,050 pence after saying it’s in talks to sell power-generation assets to Siemens. The planned disposal concerns the energy gas-turbine and compressor business, Rolls-Royce said in a release.
Sanofi climbed 1.1 percent to 78.02 euros. The Paris-based drugmaker may sell a portfolio of mature drugs that could fetch between $7 billion and $8 billion, Reuters reported, citing people familiar with the matter.
Clariant AG rose 0.7 percent to 17.32 Swiss francs. The maker of specialty chemicals reported a first-quarter net loss from continuing operations of 39 million francs ($44 million), weighed down by an 84 million-franc expense from exiting foundry-chemicals maker ASK Chemicals.
Chief Financial Officer Patrick Jany said the company is outpacing competitors in the cosmetics industry, with the year getting off to a “positive start.”