European Stocks Fall After ECB Report Dims Prospects of More QE

  • Banks fall after ECB says QE will drag on profitability
  • Actelion rallies after raising full-year profit projection

European stocks declined after a report showing an improvement in the region’s lending conditions lowered the prospects for additional monetary stimulus.

After hovering near a two-month high in the first hour of trading, equities slid as a European Central Bank survey showed credit standards on loans to companies eased for the sixth straight quarter. Banks fell after the ECB said its quantitative-easing program will drag on profitability at those companies in the next six months. The report gives policy makers less cause to act when they meet this week, said Mirabaud Securities’ John Plassard.

“The market is disappointed because if there is any improvement there, then for sure there’s no expansion of the purchases,” said Plassard, a senior equity-sales trader at Mirabaud in Geneva. “Good news is bad news. Draghi will probably continue saying ECB will use all its tools and they will repeat what is in the bank lending report.”

The Stoxx Europe 600 Index dropped 0.4 percent to 362.67 at the close of trading. Spain’s Banco Popular Espanol SA and Banco de Sabadell SA led a drop among lenders, slipping 3.3 percent or more. Europe’s equity benchmark pared a decline of as much as 0.9 percent after commodity producers trimmed losses, tracking gains in their U.S. counterparts.

Watches, Earnings

Swatch Group AG and Cie. Financiere Richemont SA fell at least 1.1 percent after a report showed Swiss watch exports had their biggest quarterly decline since 2009. The Swiss Market Index slid 0.6 percent.

Some stocks rose amid deal activity, others on financial results. Deutsche Telekom AG climbed 2.2 percent after people familiar with the matter said it is considering selling T-Mobile Netherlands. TNT Express NV jumped 10 percent after Reuters reported the European Union will give antitrust clearance to FedEx Corp.’s planned takeover of the Dutch company.

Actelion Ltd. gained 3.7 percent after the Swiss drugmaker raised its 2015 profit projection. Assa Abloy AB and Whitbread Plc added 3.3 percent or more after reporting earnings that beat estimates. InterContinental Hotels Group Plc rallied 6.9 percent after posting an increase in room revenue.

UniCredit SpA advanced 2.8 percent after Der Standard reported the lender may sell its Austrian consumer and small-company business to Bawag PSK Bank AG. UniCredit said it hasn’t made a decision yet regarding its unit in that country.

The Stoxx 600 climbed for the past three days amid positive financial results, closing at its highest level since August yesterday. Notwithstanding today’s decline, the equity benchmark has rebounded in October from a quarterly selloff triggered by concern over China’s slowdown and Volkswagen AG’s cheating scandal. It has trimmed its decline from an April record to 12 percent.

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