European Stocks Drop as Manufacturing, Services Miss EstimatesNamitha Jagadeesh and Sofia Horta e Costa
European stocks declined as data showed euro-area output expanded at a slower pace in April, and Ericsson AB led technology shares lower.
The Stoxx Europe 600 Index lost 0.4 percent to 407.18 at the close of trading, having earlier tumbled as much as 1 percent and gained 0.4 percent. A report showed euro-area manufacturing and services missed forecasts, signaling it may take longer for European Central Bank President Mario Draghi’s quantitative-easing plan to revive the economy.
Germany’s DAX Index slid 1.2 percent, among the worst in western-European markets, and France’s CAC 40 Index dropped 0.6 percent as similar data from those countries also disappointed.
“This serves as a gentle reminder that although Draghi is pumping money into the economy, it will take a bit of time to feed through,” said Ben Kumar, who helps oversee about $12 billion at Seven Investment Management in London. “If you’re an investor sitting on gains of 18 percent already this year, you’re probably quite happy to use this as a sign to take profits. Better to wait until we have real evidence of growth.”
Europe’s equity benchmark gauge has surged 19 percent in 2015, and last reached a record on April 15. It rallied the first two days of this week as results from SAP SE and Actelion Ltd. topped analysts’ projections and China’s central bank boosted stimulus measures.
A gauge of technology stocks fell the most among 19 industry groups, with Ericsson sliding 10 percent after reporting worse-than-forecast profitability. The index had closed at its highest level since 2002 on Wednesday.
Bilfinger SE plunged 18 percent, the most since 1999, after lowering its annual profit forecast because of low demand at its power and oil-and-gas businesses. Outokumpu Oyj tumbled 5.7 percent after the stainless-steel maker cut its outlook on full-year volumes at its Coils Americas unit.
“Earnings expectations had gone a bit far,” Kumar said. “We were bound to have some disappointments.”
Other stocks gained after posting results. Michelin & Cie. jumped 6.5 percent and Pernod Ricard SA advanced 2.4 percent after both companies said quarterly sales rose. Logitech International SA climbed 5.4 percent as the Swiss maker of computer mice said annual earnings gained.