Banks lead decline in European equities

FTSE and Iseq closed for May bank holiday, prompting low trading volumes elsewhere

Credit Suisse Group dropped 2.3 per cent to 27.40 Swiss francs after JPMorgan Chase forecast that its own trading revenue will slide 20 per cent this quarter. Photograph: Reuters Arnd Wiegmann

Credit Suisse Group dropped 2.3 per cent to 27.40 Swiss francs after JPMorgan Chase forecast that its own trading revenue will slide 20 per cent this quarter. Photograph: Reuters Arnd Wiegmann

Tue, May 6, 2014, 19:24


European stocks fell as violence intensified in eastern Ukraine, while a report showed Chinese manufacturing contracted for a fourth month.

The European Commission also published its spring economic forecasts, lowering its 2015 growth estimate for the overall gross domestic product of the 18-nation euro zone to 1.7 per cent, down from a February prediction of 1.8 per cent.

The London and Dublin markets were closed for the May bank holiday and the absence of FTSE trading meant volumes were lower overall. The volume of shares changing hands in Stoxx 600 companies was 64 per cent lower than the average of the last 30 days, according to data compiled by Bloomberg.

National benchmark indexes retreated in 13 of the 16 western-European markets that did open. France’s CAC 40 index managed to add 0.1 per cent, but Germany’s DAX slid 0.3 per cent.

EUROPE
The Stoxx Europe 600 Index finished down 0.3 per cent at the close of trading after running as much as 0.9 per cent lower earlier in the session. The benchmark gained 1.3 per cent last week, its largest rally in a month, amid renewed mergers-and-acquisitions activity.

A gauge of European banks contributed the most to the Stoxx 600’s decline.

Credit Suisse Group dropped 2.3 per cent to 27.40 Swiss francs after JPMorgan Chase forecast that its own trading revenue will slide 20 per cent this quarter. Societe Generale, France’s second-largest lender, retreated 1.1 per cent to €44.44, while Deutsche Bank slipped 1.1 per cent to €31.27.

Wincor Nixdorf lost 5.1 per cent to €46.20 after the maker of self-checkout tills in supermarkets posted worse-than-expected earnings.

Wacker Chemie dropped 3 per cent to €85.81 after the chemical maker also reported earnings that missed expectations. Securitas declined 4 per cent to 74.95 kronor. The security firm posted first-quarter profit of 414 million kronor, falling short of the 437 million kronor that analysts had estimated.

SAP, the maker of business-management software, lost 1.8 per cent to €56.74, after Vishal Sikka stepped down as chief technology officer after only a year in the post, citing personal reasons. The company is overhauling its management as Bill McDermott prepares to take over as sole chief executive officer later this month.

US
Stocks were little changed in early trading, as an expansion in US service industries offset concern over growth in China and political tensions in Ukraine.

Equities erased declines after the Institute for Supply Management’s non-manufacturing index rose to 55.2 in April from the prior month’s 53.1. The expansion in activity was greater than economists had forecast. Utility and energy shares rose the most among 10 industry groups in the Standard and Poor’s 500 Index.

JPMorgan Chase declined 2.4 per cent to $54.25 after saying a trading slump has deepened, leading financial shares to the biggest retreat. Goldman Sachs Group fell 1.5 per cent to $156.56 while Morgan Stanley slipped 1.8 per cent to $30.14.

Pfizer, the drugmaker that has offered to buy Britain’s AstraZeneca, fell 2.7 per cent to $29.92 as it reported earnings. UK business secretary Vince Cable said at the weekend that the US drugmaker’s bid for AstraZeneca raised questions of “overriding national interest”. New York-based Pfizer reported first-quarter adjusted earnings per share of 57 cents, beating the average analyst forecast of 55 cents.

Sotheby’s advanced 1.8 per cent to $44.19. The auction house agreed to appoint Third Point founder Dan Loeb and two of his candidates to its board of directors, a settlement that ends a bitter proxy fight between the company and its largest shareholder.

Exxon Mobil added 0.9 per cent to $102.91 while Chevron advanced 0.7 per cent to $125.59. (Additional reporting: Bloomberg)