European Stocks Drop After Weekly Gain; Alstom RetreatsCorinne Gretler
European stocks declined, after posting a ninth weekly gain in ten, as investors watched developments in Iraq and as euro-area manufacturing weakened.
Alstom SA lost 4.1 percent after General Electric Co. overcame the last hurdle for the $17 billion purchase of the company’s energy assets. Kentz Corp. jumped 32 percent after SNC-Lavalin Group Inc. agreed to buy it. Distribuidora Internacional de Alimentacion SA advanced 2.9 percent after the Spanish discount grocer said it would sell its French business to Carrefour SA.
The Stoxx Europe 600 Index lost 0.5 percent, the most since June 11, to 346.31 at the close of trading in London, after earlier sliding as much as 0.7 percent. The gauge advanced 0.3 percent last week, closing 0.5 percent away from a six-year high, as the Federal Reserve pledged to keep interest rates low for a prolonged period.
“Bullish sentiments are muted due to geopolitical risk,” said Manish Singh, who helps oversee about $2 billion as head of investments at Crossbridge Capital in London. “A deterioration in euro-area manufacturing, especially in France, where it continues to be a major drag, as well as increasing uncertainty in Iraq, which begets higher oil prices and hurts consumption, are a drag on the market.”
National benchmark indexes retreated in 14 of the 18 western-European markets today. France’s CAC 40 slipped 0.6 percent and Germany’s DAX retreated 0.7 percent. The U.K.’s FTSE 100 fell 0.4 percent. Greece’s ASE Index slumped 2.7 percent, with stocks from Piraeus Bank SA to Opap SA posting some of the biggest slides in the Stoxx 600.
Iraq’s army fought with an al-Qaeda breakaway group to recapture territory near the borders with Jordan and Syria as U.S. Secretary of State John Kerry called on Iraqi leaders to unite against the militants. President Barack Obama warned that the fighting could spill over into neighboring countries.
A Markit Economics gauge of euro-area manufacturing slid to 51.9 this month from 52.2 in May. Economists had forecast it would be unchanged. A U.S. measure of output climbed to 57.5 in June from 56.4, exceeding estimates. In China, the gauge rose to a seven-month high this month, according to the preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics. A number above 50 indicates expansion.
In the U.S., a National Association of Realtors report showed that purchases of previously owned U.S. homes climbed to a 4.89 million annualized rate in May, more than forecast. They rose to a 4.66 million rate the previous month.
Alstom dropped 4.1 percent to 26.85 euros, the lowest price in two months. Bouygues SA will sell as much as 20 percent of Alstom to the French state, meeting a condition set by the government to back the GE deal. Alstom already approved the bid by its U.S. competitor.
Bouygues slid 2 percent to 31.64 euros. Siemens AG, which had also made an offer, lost 1.7 percent to 98.57 euros.
OC Oerlikon Corp. fell 1.9 percent to 13 Swiss francs after Chief Executive Officer Brice Koch told Schweiz am Sonntag that the maker of textile machinery plans further acquisitions and wants to expand in North America.
Sulzer AG dropped 1.9 percent to 127.70 francs. Vontobel Holding AG reduced its earnings-per-share estimates on the pumpmaker for 2014, 2015 and 2016. The brokerage cited potential costs to upgrade the company’s IT infrastructure, currency fluctuations and seasonally weak first-half sales and margins.
Kentz rallied 32 percent to 929 pence. The deal values the oilfield-services provider at 1.16 billion pounds ($1.97 billion). The Montreal-based engineer will pay 935 pence a share, a 33 percent premium to last week’s close, according to a statement.
DIA added 2.9 percent to 6.75 euros. Carrefour will buy back DIA’s French business for an enterprise value of 600 million euros ($816 million), less than three years after Carrefour spun off the retailer.
Rio Tinto Group climbed 1.6 percent to 3,127 pence, and BHP Billiton Ltd. gained 1.9 percent to 1,938 pence. A gauge of miners was the best performing among 19 industry groups in the Stoxx 600, gaining 1 percent.