Photographer: Martin Leissl/Bloomberg

Winners are Losers in Last Day of Quarter for European Equities

The industries and markets that led the rally in European shares this quarter were responsible for their decline on Tuesday.

The Stoxx Europe 600 Index lost 0.6 percent to 397.3 at the close of trading in London, trimming its best first-quarter rally since 1998. Carmakers and chemicals companies fell the most among 19 industry groups. Benchmark national gauges of Germany and Portugal, up more than 22 percent this year, dropped at least 0.8 percent.

The benchmark gauge for European equities pared its quarterly advance to 16 percent. It reversed gains of as much as 0.5 percent earlier on Tuesday after a report showed the annual rate of inflation for the euro area fell for a fourth month. It then trimmed losses of as much as 1 percent as U.S. consumer confidence increased more than forecast.

“Equity markets are losing a bit of steam today,” said Guillermo Hernandez Sampere, who helps manage about 180 million euros ($193 million) at MPPM EK in Eppstein, Germany. “It will take more time to see the QE effect and consumers have to open their wallets as well. In the second half of the year, it should be more visible what the purchase program does to bring inflation more to the 2 percent level.”

The start of the European Central Bank’s quantitative-easing program and economic data beating forecasts by the most in two years helped the Stoxx 600 reach its highest level since 2000 on March 20. The gauge closed 2 percent away from a record on Tuesday.

Investors have poured money in European equities this quarter, with a U.S. exchange-traded fund tracking the stocks gathering almost $1.3 billion in 10 straight weeks of inflows, data compiled by Bloomberg show. Another ETF following the shares while hedging against currency swings has received more than $10 billion.

Money Wave

“Europe has seen a huge wave of money,” said George Godber, who helps manage about $5 billion at Miton Group in London. “We had the QE announcement and if you look at some of the numbers, it’s incredible how U.S. investors have piled into Europe. Most of the improvement is in a very nascent stage. It’s benefited exporting nations like Germany.”

Among 18 western-European markets, only Greece fell this quarter. The ASE Index dropped 6.1 percent, its longest stretch of quarterly declines in six years. Prime Minister Alexis Tsipras, elected in January, is seeking to secure bailout funds and needs to come up with a plan to convince European creditors that it will bolster the nation’s finances. So far, his proposals have failed to satisfy them.

Still, investors have put cash in an exchange-traded fund tracking the equities every week in 2015. The ASE gained 0.4 percent on Tuesday, the only increase among western-European markets, after rising as much as 2.9 percent.

Germany, Portugal

Germany’s DAX Index lost 1 percent and Portugal’s PSI 20 Index fell 0.8 percent on Tuesday. The U.K.’s FTSE 100 Index declined 1.7 percent, the most since March 10. Imperial Tobacco Group Plc and British American Tobacco Plc dropped more than 2.9 percent after a report that U.S. regulators may block a merger between two American peers.

European automakers lost 1.1 percent, trimming the best quarterly increase among Stoxx 600 industry groups to 32 percent. They reached a record high on March 16. Chemicals companies, the second-best performing sector of the quarter, slid 1.2 percent.

Miners, Energy

Commodity producers dropped more than 1 percent on Tuesday as oil headed for its longest streak of quarterly declines since 2003. Travel and leisure shares advanced the most, with Air France-KLM Group and Ryanair Holdings Plc up more than 1.9 percent.

Among companies moving on corporate news, Bank of Ireland Plc slumped 7.8 percent as Fairfax Financial Holdings Ltd. began selling half of its 5.8 percent stake in the lender.

Kingfisher Plc climbed 4.3 percent as Europe’s largest home-improvement retailer said it will close stores, stock more products and create a new global leadership team to reignite sales growth.

Yoox SpA jumped 11 percent after agreeing to buy Cie. Financiere Richemont SA’s Net-a-Porter business for stock valued at about 719 million euros. Shares of the Swiss company slipped 2.1 percent.

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