Europe Stocks Halt Rally as Standard Chartered Leads Banks Lower

  • Stoxx 600 erases advance as miners, lenders resume losses
  • Saudi Arabia, Russia announce agreement to freeze oil output

Summarizing Today's Wild European Market Action

A rebound for European stocks once again proved short-lived on renewed concerns about global-growth prospects, dragging banks and miners lower.

Lenders fell after their biggest two-day surge since 2011. Mining-related companies also halted a rally that pushed them up 11 percent, with steel-pipe maker Tenaris SA and Norsk Hydro ASA leading declines. Energy stocks reversed an advance, as oil retreated after Saudi Arabia and Russia agreed to freeze output.

The Stoxx Europe 600 Index dropped 0.4 percent to 320.37 at the close of trading, after rising as much as 0.8 percent and falling 1 percent. Volatility has been increasing in the past two months as concerns grew over the efficacy of central-bank stimulus, while economic data started missing estimates. Germany’s DAX Index and Greece’s ASE Index were among the worst performers of western-European markets, falling at least 0.8 percent.

“We’ve enjoyed a tactical rebound, but most of the risk is still on the downside,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf. “People are looking at policy makers -- be it central banks or OPEC -- for more reassurance because everything boils down to what will happen to global growth. Markets need more than just a freeze in oil production, they need a cut.”

Shares briefly extended losses after Germany’s ZEW Center for European Economic Research said investor confidence fell to its lowest level since October 2014 in February. The Stoxx 600 has lost 23 percent from its April record and trades at a valuation of about 14 times estimated earnings, down from 17 in April. 

European banks have been hurt the most in this year’s rout that took the Stoxx 600 down as much as 17 percent. They’ve slumped 22 percent as a group in 2016 on growing concern over bad loans at Italian lenders, the impact of the low-rate environment on profits and Deutsche Bank AG’s creditworthiness.

Standard Chartered Plc dropped 5.3 percent on Tuesday after Investec Plc cut its rating to hold from buy, recommending investors take profits after a 17 percent surge in two days. UBS Group AG lost 0.9 percent and Commerzbank AG slid 2.2 percent. Greece’s Alpha Bank AE slipped 5.6 percent.

Among stocks moving on corporate news, Telecom Italia SpA slid 6.5 percent after reporting 2015 revenue and earnings that missed analysts’ estimates. Air Liquide SA retreated 4.8 percent after saying that its North American business was “marked by a slowdown in sectors related to oil and gas production and metal fabrication.” Volkswagen AG slipped 1.6 percent after data showed its market share declined for a fifth consecutive month.

Anglo American Plc reversed an earlier slide, rising 1.3 percent after announcing plans to reduce debt and sell as much as $6 billion of assets by the end of the year following a doubling of its annual loss in 2015.

Electricite de France SA jumped 9.5 percent after announcing plans to curb costs as it targets generating enough cash to cover dividend payouts by 2018. Michelin & Cie. added 3.4 percent after it posted a better-than-estimated increase in full-year earnings. 

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