In Europe: European Stocks Decline as BMW, Daimler Retreat on China

20 March 2012

Market cooling off after (a perhaps overly) optimistic week. “The absence of bad news” does not tell the whole story!

European (SXXP) stocks retreated for a second day as an official at China’s association of carmakers said auto sales will miss its forecast in 2012. U.S. index futures and Asian shares also dropped.

Bayerische Motoren Werke AG (BMW) and Daimler AG fell more than 4 percent. Rio TintoGroup slid 3.6 percent as a gauge of mining companies retreated. Metro AG (MEO) advanced 1.5 percent after Germany’s largest retailer posted fourth-quarter earnings that matched analysts’ estimates.

The Stoxx Europe 600 Index slid 1 percent to 269.23 at 12:35 p.m. in London for its biggest drop in two weeks. The gauge has still gained 10 percent this year as the European (SXXP) Central Bank disbursed 1 trillion euros ($1.3 trillion) to the region’s lenders. Futures on the Standard & Poor’s 500 Index (SPM2) expiring in June declined 0.6 percent today. The MSCI Asia Pacific Index also decreased 0.8 percent.

“Last week was a major move and there’s no surprise that we’ve seen a bit of a rest this week,”David Miller, a partner at Cheviot Asset Management in London said in a Bloomberg Television interview with Caroline Hyde. “There’s been a growing realization that in fact the economic numbers particularly out of the States have been better than expected and consistently good and in Europe we’ve had the absence of bad news.”

The benchmark Stoxx 600 slipped 0.1 percent yesterday, paring the previous week’s 2.6 percent rally, its biggest weekly gain since early February.

VStoxx Index Gains

The VStoxx Index (V2X), which measures the cost of option prices on the Euro Stoxx 50 Index, jumped 8.9 percent to 19.99 today. The European volatility gauge has still plunged 63 percentsince its almost 32-month high on Sept. 12 and is 24 percent below its historical average before today of 26.37, according to data compiled by Bloomberg going back to January 1999.

The volume of shares changing hands on the Euro Stoxx 50 Index was 17 percent less than the average over the past 30 days, according to data compiled by Bloomberg.

A U.S. Commerce Department report showed that housebuilding in the world’s largest economy fell in February. Housing starts dropped to a 698,000 annual rate last month from a revised 706,000 pace in January. That fell short of the median estimate of 80 economists surveyed by Bloomberg News. Building permits, a proxy for future construction, climbed to the highest level since October 2008.

China’s Car Sales

Vehicle sales in the world’s second-largest economy will probably miss the China Association of Automobile Manufacturers’ forecast for 2012, according to an official at the state-backed body.

Total vehicle deliveries — forecast to grow 8 percent this year — may fail to increase by even 5 percent because of the “difficult” economy, Gu Xianghua, one of two deputies to the secretary general at the CAAM, said at a conference in Qingdao today, giving his personal opinion.

BMW, the world’s largest maker of luxury vehicles, sank 4.9 percent to 68.32 euros. Daimler AG (DAI), whose Mercedes-Benz division is third-biggest after BMW and Audi, dropped 4.7 percent to 44.88 euros. Volkswagen AG (VOW), which owns Audi, slid 4.4 percent to 133.10 euros. Porsche SE decreased 3.3 percent to 44.98 euros. Continental AG (CON), Europe’s second-largest tiremaker, plunged 6.3 percent to 67.31 euros.

Renault Shares Retreat

Renault SA (RNO) slid 3.3 percent to 40.21 euros. The French carmaker and its Japanese affiliate Nissan Motor Co. will probably complete a deal to acquire control of OAO AvtoVAZ “soon,” said Igor Komarov, president of Russia’s biggest carmaker.

The shareholders have reached an agreement, though the deal is “complex and multifaceted,” Komarov said at a conference in Moscow, declining to elaborate or clarify what he meant by “soon.’

Rio Tinto, the world’s third-largest mining company, dropped 3.6 percent to 3,483.5 pence. BHP Billiton Ltd. (BHP), the world’s biggest mining company, slid 3.1 percent to 1,984 pence as a gauge of mining shares fell.

BHP Billiton said China’s steel production has slowed as the world’s fastest-growing major economy switches its focus toward consumers and away from large building projects.

Royal Bank of Scotland Group Plc (RBS) dropped 2.5 percent to 28.43 pence. Britain’s biggest state-owned lender will shut some operations in South Korea, Indonesia and Singapore after failing to find a buyer for its businesses in those countries.

HSBC, Deutsche Bank

Banking shares as a group declined 1.7 percent. HSBC Holding Plc, Europe’s biggest bank, slid 2.3 percent to 564.8 pence for the largest contribution to the Stoxx 600 (SXXP)’s decline.Deutsche Bank AG (DBK), Germany’s largest lender, fell 1.8 percent to 38.78 euros. Credit Agricole SA (ACA) lost 2.2 percent to 5.03 euros.

Lafarge SA (LG), the world’s largest cement maker, sank 3.3 percent to 35.61 euros, leading construction stocks lower.

Unilever NV (UNA), the world’s second-biggest consumer-products maker, dropped 1.5 percent to 2,057 pence after its stock was cut to hold from buy at Investec Plc.

Akzo Nobel NV (AKZA), the world’s biggest paintmaker, slid 2.6 percent to 44.26 euros. The stock was cut to underperform from neutral at Bank of America Corp., meaning that shares will perform worse than benchmark indexes.

Metro (MEO) gained 1.5 percent to 31.34 euros after posting earnings before interest, taxes and special items that declined to 1.31 billion euros from 1.5 billion euros in the year-earlier period. That matched the average estimate of 14 analysts surveyed by Bloomberg.

Telekom Austria AG (TKA) led telecommunications shares higher, gaining 2.4 percent to 8.79 euros. Vodafone Group Plc (VOD) rose 1.6 percent to 170.1 pence. Telecom shares posted the best performance of the 19 industry groups in the Stoxx 600.


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