European Stocks Decline as Republicans Cancel Tax Vote
European (SXXP) stocks fell from a 19-month high as U.S. House Republicans canceled a vote on higher taxes for top earners, fueling concern budget talks will fail.
Aeroports de Paris slumped the most in 16 months after lowering its profit and traffic-growth projections. ArcelorMittal (MT) slid 2.5 percent after posting a $4.3 billion writedown. A gauge of mining companies retreated.
The Stoxx Europe 600 Index dropped 0.3 percent to 280.95 at the close in London, paring its weekly gain to 0.6 percent. The benchmark measure is still rallying for the seventh straight month and has surged 15 percent so far this year as the European Central Bank and the Federal Reserve expanded asset purchases.
“The stalemate in Washington is not really increasing the probability of a favorable outcome this year,” said Witold Bahrke, a senior strategist at PFA Pension A/S in Copenhagen, where he helps oversee $55 billion. “As of now, it points to a solution in the new year. Towards the year-end, politics will continue to overshadow economics and fundamentals.”
The volume of shares changing hands on Stoxx 600 companies was 56 percent more than the average of the last 30 days, according to data compiled by Bloomberg.
Indexes pared earlier losses after a report showed orders for durable goods in the U.S. climbed 0.7 percent last month, beating the median forecast for a 0.3 percent increase in a Bloomberg survey. A separate release showed U.S. consumer confidence fell in December to a five-month low.
U.S. House Speaker John Boehner, a Republican, scrapped a plan to allow higher tax rates on annual incomes above $1 million, yielding to resistance from party colleagues. Talks between Boehner and President Barack Obama are stalled with 10 days to go before the year-end deadline for a budget compromise.
House members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach agreement to avert more than $600 billion of tax increases and spending cuts set to take effect in January.
The Congressional Budget Office says the U.S. will probably tumble back into a recession should lawmakers fail to reach an accord on the budget.
National benchmark indexes fell in 12 of the 18 western European markets. France’s CAC 40 slid 0.2 percent. Germany’s DAX lost 0.5 percent. The U.K.’s FTSE 100 declined 0.3 percent.
Aeroports de Paris (ADP) slumped 5.4 percent to 58.62 euros, the biggest decline since August 2011, after cutting projections for earnings before interest, taxes, depreciation and amortization and for traffic growth.
ADP now expects Ebitda growth of 25 percent to 35 percent between 2009 and 2015, compared with its previous forecast of 40 percent. The operator of Charles de Gaulle and Orly airports also expects an annual traffic-growth rate ranging from 1.9 percent to 2.9 percent between 2010 and 2015, lower than a previous estimate of 3.2 percent.
ArcelorMittal dropped 2.5 percent to 12.88 euros. The world’s biggest steelmaker will write down the goodwill in its European businesses by about $4.3 billion as the region’s weakening economy erodes demand.
The writedown will take the form of a non-cash impairment charge recorded in the fourth quarter of 2012, the Luxembourg- based company said. Steel consumption in Europe has dropped by about 8 percent this year, it said.
Eurasian Natural Resources Corp., a producer of ferro alloys and iron ore in Kazakhstan, slid 1.4 percent to 276.9 pence. The stock was cut to neutral from buy at Goldman Sachs Group Inc. A measure of the shares of commodity companies declined for a third day.
Alcatel-Lucent SA (ALU) lost 3.8 percent to 1.02 euro. Standard & Poor’s may cut the French network-equipment vendor’s long-term rating. “Ongoing cash losses and rising interest costs could offset the positive impact” of its recent refinancing on liquidity, the ratings company said.
Alcatel’s shares rallied 24 percent since their Dec. 13 close through yesterday after the company reached a 1.6 billion- euro ($2.1 billion) financing deal.
Spectris Plc (SXS) fell 1.5 percent to 2,019 pence, for the largest drop in more than a month. the U.K.’s biggest maker of production-testing gear was downgraded to hold from buy at Investec.
Skanska AB (SKAB) dropped 1.9 percent to 108.40 kronor. The Nordic region’s biggest construction company will take a 500 million kronor ($77 million) charge on its Latin American operations in the fourth quarter.
William Hill Plc (WMH), the U.K. bookmaker with more than 2,000 outlets, slid 2.4 percent to 347.8 pence. The stock was cut to reduce from hold at Numis Securities Ltd.
SBM Offshore NV (SBMO), the largest maker of floating oil and gas platforms, dropped 4.2 percent to 10.52 euros. KBC Groep NV cut the price target for the stock to 15 euros from 17 euros.
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