Tags: europe | stocks | catalonia | spain

Europe Stocks Decline to 3-Week Low as Catalonia Seeks Aid

Tuesday, 28 August 2012 12:05 PM

European stocks declined to a three-week low Tuesday, snapping two days of gains, as the Spanish region of Catalonia asked for a bailout from the central government and Japan lowered an assessment of its economy.

G4S Plc dropped 2 percent after the security company said that first-half profit slumped 73 percent. Banco Santander SA slipped. Vestas Wind Systems A/S surged 19 percent after saying it has started talks with Mitsubishi Heavy Industries Ltd. over possible cooperation.

The Stoxx Europe 600 Index slid 0.7 percent to 267.3 at 4:30 p.m. in London, its lowest level since Aug. 6. The benchmark measure has still risen 14 percent from this year’s low on June 4 as European Central Bank President Mario Draghi pledged to do whatever it takes to preserve the euro and the region’s political leaders agreed to ease repayment terms on loans to Spain’s banks.

“The world economy in the second quarter was the worst in quite some time, and Japan is catching up now,” said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland. “It’s a reaction to what’s going on and it was overdue that they correct the assessment.”

Spain’s Catalonia region said it will ask for a 5 billion- euro ($6.3 billion) loan from the country’s central government. The Spanish cabinet approved a fund of as much as 18 billion euros on July 13 to help the most indebted regional governments manage their financial deficits.

Japan’s Economy

Japan’s government downgraded its view on personal consumption, housebuilding, exports, imports and industrial output in the world’s third-largest economy. It also lowered its assessment of the global economy.

The Cabinet Office said that risks to Japan’s economy include a “further slowing down of overseas economies and sharp fluctuations in the financial and capital markets,” according to a monthly report released in Tokyo today.

Of the 314 companies listed on the Stoxx 600 that have reported first-half net income, 183 have exceeded analysts’ estimates, while 125 have missed them, according to data compiled by Bloomberg.

National benchmark indexes retreated in every western- European market today, except for Iceland and Portugal. The U.K.’s FTSE 100 Index lost 0.1 percent, while France’s CAC 40 Index slid 0.8 percent. Germany’s DAX Index dropped 0.6 percent.

Trading Volume

The volume of shares changing hands on the Stoxx 600 was 22 percent lower than the average of the last 30 days, data compiled by Bloomberg show.

In the U.S., a report Tuesday showed that a measure of consumer confidence dropped in August. The Conference Board’s gauge fell to 60.6 from 65.4 in July. That fell short of the median forecast of economists in a Bloomberg survey.

G4S retreated 2 percent to 261 pence. Net income fell to 29 million pounds ($46 million) from 108 million pounds a year earlier after failing to fulfill a staffing contract for the London Olympic and Paralympic Games.

“We were deeply disappointed that we had significant issues with the London 2012 Olympics contract,” Chief Executive Officer Nick Buckles said in a statement. market.’’

Spanish lenders dragged a gauge of European banks lower. Santander slipped 0.8 percent to 5.57 euros. Banco de Sabadell SA fell 0.8 percent to 2.10 euros, while Bankia SA, which was nationalized earlier this year, lost 4.2 percent to 1.17 euros.

Vestas Rallies

Vestas jumped 19 percent to 40.19 kroner, its highest price in three months. Speculation that the world’s largest turbine maker may be a bid target rose after the Sunday Times said on July 1 that the company may put itself up for sale.

Ipsen SA gained 5 percent to 19.49 euros after reporting first-half sales of 630 million euros, exceeding the average analyst estimate of 607 million euros. Full-year sales for specialty-care drugs will grow at the upper range of the company’s previous forecast of 8 percent to 10 percent.

CFAO SA advanced 1.5 percent to 37.45 euros after Toyota Tsusho Corp. offered to buy 70 percent of the French company’s shares for 1.62 billion euros. Toyota Tsusho, the trading arm of Japan’s largest carmaker, already owns 30 percent of CFAO.

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Tuesday, 28 August 2012 12:05 PM
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