European values retreat on growth fears

European stocks fell from a five-year high as the EU Commission cut its growth forecast for the euro area and a number of heavy hitters reported results showing profits coming in below market expectations.

While stocks slid across the continent, they are still 15 per cent ahead this year so far on the back of stimulus programmes in the both the US and Europe.

The European Central Bank is widely expected to cut its benchmark interest rate this week, although some observers expect no change. Meanwhile, the European Commission trimmed its forecast for euro-area growth next year to 1.1 per cent, less than the 1.2 per cent it predicted last May.

DUBLIN
It was Ryanair round two in Dublin as the airline picked itself up from a drubbing handed out on Monday following its second profit warning since September. The stock fell 12.6 per cent on Monday but began climbing back yesterday, adding 4.73 per cent to close at €5.582 from an opening quote of €5.33. About 11.6 million of its shares changed hands.

Aer Lingus also suffered in the wake of its rival's profit warning, but it produced numbers and stuck to its full-year guidance of a €60 million operating profit. It ended up one of the best performers, adding 5.7 per cent to close at €1.39.

Another big climber was fruit distributor, Total Produce, which added 5.13 per cent to end the day at 85 cent. Dealers suggested that investors believed it was trading on a price-earnings multiple far below the one applied to peers.

Insulation specialist Kingspan which is due to publish an interim management statement next week, also attracted a few buyers, gaining 2.94 per cent to close at €12.95.

Bank of Ireland slid 1.88 per cent to 26.1 cent. Banks were weak across Europe as questions remains about their likely capital requirements.

LONDON
Insurers RSA plunged 6.27 per cent to 121 pence, the largest slide in eight months, after saying wind damage in Europe and adverse weather in Canada will push return on equity below 10 per cent for the year. That compares with a previous target range in August of 10 per cent to 12 per cent.

Marks & Spencer advanced 4.5 per cent to 509 pence after reporting the smallest decline in general-merchandise sales in more than two years. Sales at stores open at least a year fell 1.3 per cent in the quarter ended September 28th.

Anglo American, owner of the world's biggest platinum mine, gained 2.8 per cent to 1,536 pence and Glencore Xstrata, the world's fourth-largest commodity producer, advanced 1.9 per cent to 341.8 pence. Mining stocks were the best performers in Europe on the day.

EUROPE
BMW slid 2.9 per cent to €81.20, its biggest drop since August 27th. The automaker reported a 3.7 per cent decline in third-quarter earnings before interest and taxes as spending on expansion offset stronger demand for the 3-Series saloon.

Orange retreated 3.9 per cent to €9.75 as rival Bouygues unveiled a new internet and calls package for €15.99 a-month, a price that analysts described as "particularly aggressive". Bouygues declined 3 per cent to €28.24, the largest retreat in two months.

Beiersdorf climbed 5.3 per cent to €73.44 after saying sales will rise 6 per cent to 7 per cent this year. The Hamburg- based company had previously forecast revenue would increase 5 per cent to 6 per cent.

US
US stocks fell on the back of profit taking. GT Advanced Technologies climbed 21.4 per cent to $10.17 after the firm said Apple will open a manufacturing facility in Arizona in partnership with the mineral crystal specialist to make sapphire materials for electronic devices.

CVS Caremark advanced 2.4 per cent to $63.47 and Mosaic lost 1.3 per cent to $46.14. Tenet Healthcare was down 9.6 per cent to $43.62.
– (Additional reporting: Bloomberg)