Volkswagen results help sink European stocks

Eurostoxx 50: 2,692.76 (–0.95) Frankfurt DAX: 7,190.06 (–62.62) Paris CAC: 3,712.66 (–21.41)

MOST EUROPEAN stocks declined yesterday, as companies from Volkswagen to Credit Suisse reported earnings that missed analysts’ estimates and as US lawmakers moved no closer to a deal to avert a default.

“What’s really weighing on the market is the problem of the US debt ceiling,” said Jerome Forneris, who helps manage $11 billion at Banque Martin Maurel in Marseille.

“We only have 4½ days left. If the US defaults, it’s bad for the whole world. They have to resolve this problem. Investors are pulling money out of stocks and buying gold. People are worried about the uncertainty and are looking for safe havens.”

National benchmark indexes fell in 13 of the western European markets.

Of the 141 Stoxx 600 companies that have reported quarterly earnings since July 11th, 51 per cent have missed analysts’ estimates for profit per share and 40 per cent have beaten predictions.

Volkswagen slipped 4.2 per cent to €138.05 as Europe’s largest car maker said rising commodity prices and a strengthening euro will damp earnings gains this year. Volkswagen also posted second-quarter earnings before interest and taxes that fell short of the average estimate of 14 analysts surveyed by Bloomberg.

Credit Suisse dropped 1.6 per cent to 28.80 Swiss francs. The lender said it plans to cut about 2,000 jobs after second-quarter profit fell 52 per cent.

Alcatel-Lucent plunged 15 per cent to €2.86. France’s largest telecommunications equipment supplier fell amid concern spending by US mobile operators in the second half will slow.

Chemical makers posted the biggest loss among the 19 industry groups in the Stoxx 600.

BASF sank 4.2 per cent to €63.09. Kemira Oyj fell 9.4 per cent to €10.82. Technip, Europe’s second-largest oilfield-services provider, gained 2.2 per cent to €75.45.

Construction and industrial stocks fell, led by Lafarge, which dropped 5.1 per cent to €37.68.

Air France-KLM slumped 8.1 per cent to €8.62.

Deutsche Lufthansa declined 2.8 per cent to €14.07. Europe's biggest airlines posted earnings that missed analysts' estimates. – (Bloomberg)