European Stocks Little Changed as Espirito Santo Declines

European stocks were little changed as investors awaited minutes from the Federal Reserve’s most recent meeting and as Banco Espirito Santo SA led Portuguese stocks to this year’s low.

Banco Espirito Santo dropped 4.7 percent after parent company Espirito Santo International SA delayed payment on short-term notes. Sodexo slid 1.8 percent after the world’s second-largest catering company cut its full-year revenue forecast. Admiral Group Plc tumbled the most since September after the U.K. car insurer forecast lower margins for business written this year. Seadrill Ltd. rose 1.2 percent after the biggest drilling-rig company canceled a $1 billion convertible-bond sale.

The Stoxx Europe 600 Index slipped less than 0.1 percent to 339.96 at the close of trading, its lowest level since May 20. The gauge fell 1.4 percent yesterday after Air France-KLM Group cut its profit forecast and as investors weighed equity valuations that are near the highest multiples since 2009. The PSI 20 Index declined 2.1 percent to 6,371.43 today.

“It was a risk-off shift in the last three days,” Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland, said. “It’s probably more a lowering of some positions into the summer. The Fed minutes could be very important. There are some rumors about some hawkish comments.”

The Fed will publish minutes of its June 17-18 meeting, when officials trimmed monthly bond purchases to $35 billion. U.S. central bank Chair Janet Yellen had told reporters then that rates will probably stay low for a considerable time.

National benchmark indexes rose in 10 of the 18 western European markets. France’s CAC 40 and Germany’s DAX added 0.4 percent, while the U.K.’s FTSE 100 lost 0.3 percent.

Payment Postponed

Banco Espirito Santo fell 4.7 percent to 61.5 euro cents. Espirito Santo International’s payment delay follows the bank’s disclosure in May that its parent company faced a “serious financial situation.” Last month, Moody’s Investors Service placed the lender under review for a potential downgrade citing “corporate governance shortcomings.”

Portugal Telecom SGPS SA slid 5.5 percent to 2 euros, its lowest price since its initial public offering 19 years ago. Brazil’s state development bank yesterday criticized the Lisbon-based company’s acquisition of debt from a subsidiary of Grupo Espirito Santo, one of its largest shareholders.

Sodexo lost 1.8 percent to 77.56 euros. The company said sales excluding acquisitions will increase 2.2 percent to 2.5 percent in the year through August, lower than an earlier forecast of 2.5 percent to 3 percent. Sodexo also reported nine-month revenue growth that missed analysts’ estimates.

U.K. Insurers

British insurers led a gauge of European insurance companies lower after a report showed U.K. prices for new-car insurance fell for a record 10th quarter.

Admiral Group dropped 3.3 percent to 1,522 pence. The company said it is yet to see signs of a return to growth in premiums. Admiral also hired Bank of America Corp. as the book runner and adviser for a subordinated-bond sale, a person familiar with the matter said.

Aviva Plc declined 3.6 percent to 493.9 pence as it hosted a day of discussions with analysts and investors. The U.K.’s second-biggest insurer by market value said it will double the holding company’s annual excess cash flow by the end of 2016 and cut the operating expense ratio to below 50 percent.

Those targets aren’t “overly challenging,” and the company failed to specify a target date for some debt-reduction plans, Shore Capital Group Ltd. said in a note. Oriel Securities Ltd. said Aviva didn’t say how it will deliver revenue growth.

Seadrill, EasyJet

Seadrill advanced 1.2 percent to 235.50 kroner. The offshore-drilling company controlled by billionaire John Fredriksen said that it faced an unattractive conversion price for the bond issue even though the order book was covered. Seadrill shares slumped 5.4 percent yesterday after announcing the sale.

EasyJet Plc climbed 3.1 percent to 1,287 pence. UBS AG said Europe’s second-largest discount airline may maintain or raise its guidance later this month when it reports quarterly results.

Thales SA added 1.5 percent to 43.57 euros. JPMorgan Chase & Co. upgraded the French maker of defense electronics to overweight, the equivalent of buy, from neutral. The brokerage said the stock had declined more than its rivals, even though it is one of the few companies in the industry that JPMorgan doesn’t see a need to cut earnings estimates for.

Gemalto NV rose 3 percent to 77 euros. Morgan Stanley raised its recommendation on the security-software company to equal weight, the equivalent of hold. The brokerage cited rising demand for chip-card security in China and the U.S. as well as growth in high-end SIM card purchases.

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