Europe Stocks Drop With Miners on Fed Rate Increase Speculation

  • Linde leads chemicals lower on tie-up regulatory concern
  • Carlsberg retreats after first-half profit misses estimates

Stoxx 600 Suffers Longest Losing Streak Since June

European stocks posted their longest run without gains in two months, as investors speculated on whether the Federal Reserve will raise interest rates this year, earlier than expected.

The Stoxx Europe 600 Index slipped 0.8 percent to 340.47 at the close of trading, its fourth day without a rise. Miners led declines amid weak commodity prices. Stocks fell in thin trading Tuesday as a stronger euro weighed on exporters and investors assessed New York Fed President William Dudley’s warning that they are underestimating the likelihood of higher borrowing costs, and a rate increase could come as soon as September. The volume of Stoxx 600 shares traded today was 25 percent lower than the 30-day average.

“A pull-back is following through in European stocks today after the Fed raised the possibility of a September rate hike -- it seems like expectations had become too muted,” said William Hobbs, the head of investment strategy at the wealth-management unit of Barclays Plc in London. “There’s some profit taking setting in as commodities soften a little bit.”

Atlanta Fed chief Dennis Lockhart backed up Dudley’s stance, saying he’s confident growth is accelerating enough for at least one hike in 2016. St. Louis Fed chief James Bullard speaks today and the minutes of the U.S. central bank’s last policy meeting are scheduled for release after European markets close. Traders have brought forward their bets for a rate increase, with December now the first month with at least even odds of a move.

Investors are evaluating a recent rally that helped European shares erase their post-Brexit losses and propelled U.K. and German benchmarks into bull markets. Confidence that central banks will continue to support growth, and some better-than-forecast corporate results drove a rebound after a slump following Britain’s vote to leave the European Union. Still, the Stoxx 600 today dropped below its 200-day moving average, a level that has proved a hurdle after past rallies. The benchmark is down 6.9 percent for the year.

Among stocks moving today:

  • Linde AG fell 2.9 percent, leading declines among chemical shares, as Citigroup Inc. said that a potential tie-up with Praxair Inc. would face tough regulatory hurdles. 
  • ASML Holding NV lost 4.8 percent after Intel Corp. said it won’t use the semiconductor-equipment maker’s lithography technology to make its 10-nanometer chips. 
  • Finnair Oyj slipped 7.8 percent after the carrier scaled back plans to add flights this year as terrorism in Europe hurt demand for travel. 
  • Carlsberg A/S slid 5.2 percent after the Danish brewer reported first-half profit that missed analysts’ estimates as the weakness of Russia’s ruble eroded earnings. 
  • Admiral Group Plc tumbled 7.7 percent, the most since 2011, after reporting a decline in its solvency ratio. 
  • Wienerberger AG retreated 6.2 percent after the world’s biggest maker of bricks said it’s had to cut production of clay products in the U.K. as demand slowed in the run up to the Brexit referendum.
  • ABN Amro rose 2.5 percent after posting better-than-estimated second-quarter profit.
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