In Europe: European Stocks Decline on Economic Concerns

6 March 2012

Seems like Monday all over again! Geneva fund manager says “a lot of the good news is behind us.”

European (SXXP) stocks fell as a report confirmed a contraction in the euro-area economy and as investors weighed Greece’s chances of avoiding a default by getting private creditors to accept a debt swap. U.S. index futures and Asian shares also dropped.

PSA Peugeot Citroen tumbled 4.7 percent after announcing plans to raise 1 billion euros ($1.32 billion) in a rights offer and saying it won’t pay a dividend for 2011. Cable & Wireless Worldwide (CW/) Plc retreated 5.9 percent after a newspaper report speculating that a potential bidder won’t make an offer for the company. Nyrstar NV, the largest producer of refined zinc, paced commodity shares lower.

The Stoxx Europe 600 (SXXP) Index declined 1.3 percent to 262.01 at 11:34 a.m. in London. The benchmark gauge slid yesterday as data showed euro-area manufacturing and services shrank more than estimated, and China cut its economic-growth forecast. The measure has still advanced 7.1 percent so far in 2012. Futures on the Standard & Poor’s 500 Index expiring this month lost 0.8 percent. The MSCI Asia Pacific Index slipped 1.2 percent.

“A lot of the good news is behind us,” said Pierre Mouton, a fund manager who helps oversee $7.5 billion at Notz Stucki & Cie. in Geneva. “We’re seeing investors locking in profit and waiting to see what happens. We’ll let the Greek story pass. The economy in Europe can be a bit of a worry, but expectations aren’t too high. Everyone is expecting bad numbers.”

GDP Shrinks

The euro area’s economy contracted in the fourth quarter as investment plunged the most since 2009 and exports and consumer spending also dropped.

Gross domestic product declined 0.3 percent from the third quarter, the European (SXXP)Union’s statistics office said today, confirming an initial estimate published on Feb. 15. Exports fell 0.4 percent after a 1.4 percent gain in the previous three months, while household spending declined 0.4 percent and investment slid 0.7 percent.

The investors that so far declared their participation in the restructuring hold about 20 percent of Greek bonds. The 12 members of the creditors’ steering committee that said they would join in the exchange have debt with a face value of at least 40 billion euros, compared with the 206 billion euros of bonds in private hands, according to data compiled by Bloomberg.

The goal of the swap, which runs until March 8, is to reduce by 53.5 percent the total of privately held Greek sovereign debt, helping the country avert an uncontrolled default.

Peugeot Rights Offer

Peugeot (UG) tumbled 4.7 percent to 13.54 euros. Europe’s second-biggest carmaker said it is seeking to raise about 1 billion euros in a rights offer and proceeds will be used for projects with General Motors Co. The company won’t pay a dividend for 2011.

Shareholders, who will have the right to buy 16 shares for every 31 they already own, will pay 8.27 euros per share. That is a 42 percent discount to yesterday’s closing price.

Cable & Wireless Worldwide dropped 5.9 percent to 31.5 pence. Vodafone Group Plc may not make an offer for the company by a March 12 deadline, the Telegraph reported, citing market speculation.

Vodafone, the world’s largest mobile-phone company, said last month it is in the early stages of evaluating a bid for Cable & Wireless.

A gauge of mining-company shares slid 1.5 percent as metal prices fell in London. Nyrstar (NYR) lost 2.6 percent to 6.52 euros. Eramet SA, a refined nickel producer, tumbled 4.3 percent to 109.3 euros. Kazakhmys Plc, Kazakhstan’s biggest copper producer, retreated 3.2 percent to 921 pence.

Michael Page, Q-Cells

Michael Page International Plc, a recruitment services company, tumbled 5.6 percent to 452.3 pence. The stock was cut to “neutral” (MPI) from “buy” at Citigroup Inc.

Q-Cells SE (QCE), a solar-cell maker, plunged 9.2 percent to 26 euro cents, its lowest on record, after losses exceeded sales in the fourth quarter and the company forecast further losses in 2012. Q-Cells posted a loss of 393 million euros in the last three months of 2011 on sales of 353 million euros in a preliminary report today.

Greece’s ASE Index (ASE) rose 1 percent, the only western European market to advance today.National Bank of Greece SA (ETE) climbed 5.6 percent to 2.44 euros, while Alpha Bank SA jumped 8.5 percent to 1.41 euros.

RWE AG (RWE), Germany’s second-biggest utility, advanced 1.8 percent to 35.12 euros after full-year profit fell less than analysts forecast. Recurrent net income, the measure used to calculate the dividend, fell to 2.48 billion euros from 3.75 billion euros a year earlier, the company said. That beat the 2.4 billion-euro median estimate of six analysts surveyed by Bloomberg News.


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