Europe Stocks Snap 2-Day Gain as Roche, H&M Earnings Disappoint

  • VStoxx heading for biggest monthly advance since August
  • Stoxx 600 deepened drop after energy shares pared gains

Earnings Dominate European Trading

Worse-than-estimated earnings from companies including Roche Holding AG and Hennes & Mauritz AB dragged European stocks lower.

Roche slid 3.8 percent, leading drugmakers lower. H&M dropped 4.8 percent after also warning a stronger dollar will continue to weigh on first-quarter profit. Stocks have moved more in step with with crude prices lately, and Europe’s benchmark deepened losses after energy shares pared some gains.

The Stoxx Europe 600 Index dropped 1.6 percent at the close. It swung between gains and losses at least six times, falling as much as 2.2 percent and rising as much as 0.3 percent. Worries about global growth amid a rout in oil prices and a slowdown in China have sent the Stoxx 600 down 8.5 percent this month, putting it on track for the worst January since 2008.

“Risk appetite is still very fragile,” said William Hobbs, head of investment strategy at Barclays Plc’s wealth-management unit in London “Right now, its a matter of guilty till proven innocent in terms of whether or not the world is on the cusp of the next economic downturn. And the latest European earnings have been mixed.”

Volatility has been on the rise, with the VStoxx Index of euro-area market stress heading for its biggest monthly gain since August. The volume of futures traded shows investors are betting the swings will only get worse.

Among other stocks moving on corporate results, First Group Plc slid 12 percent after lowering its forecast for full-year operating profit. Tele2 AB slumped 11 percent after the Swedish wireless carrier predicted earnings that missed analysts’ estimates.

Anglo American Plc rallied 8.7 percent after saying copper output rose 23 percent in the fourth quarter. Repsol SA gained 5.3 percent after saying annual net income will surpass the higher end of its previous projections.

Federal Reserve officials yesterday reiterated a gradual pace of rate increases and said they’ll watch to see how the global economy and markets affect the U.S. outlook.

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