European stocks fall on Fed pessimism

European stocks fell from an 18-month high yesterday as Federal Reserve chairman Ben Bernanke said the US central bank’s plan to buy $45 million a month of treasuries won’t offset the effects of the so-called “fiscal cliff” – a looming combination of government spending cuts and tax rises that could hit its economy in 2013.

The uncertainty sent investors into defensive mode, consolidating recent gains after what had been the longest continuous rally of the year.

DUBLIN

The Iseq turned in a sluggish performance, with stocks failing to gain much momentum over the course of the session and the index as a whole closing down 0.4 per cent.

Among the major stocks, building materials group CRH finished flat at €14.46, while food group Kerry closed up marginally at €40.80.

Ryanair, which announced that Krakow in Poland would be its 53 base, fell 0.5 per cent to €4.80.

Bank of Ireland dropped 2.5 per cent to 12 cent and Elan declined 1.6 per cent to €7.79, but it was a better day for paper and packaging group Smurfit Kappa, which climbed 1 per cent to €9.55.

Independent News and Media remained stuck on 4 cent after Australasian media group APN, in which it holds a 29.5 per cent stake, forecast lower earnings than expected and signalled its intention to dispose of its publishing businesses in New Zealand.

Glanbia fell 0.5 per cent to €7.71 a day after the food company cleared the last hurdle to reforming its company structure.

LONDON

The FTSE 100 index of blue chip shares slid 0.3 per cent on lower-than-average volumes as investors were sent scurrying by Bernanke.

AstraZeneca was the most heavily traded stock in the index, trading over twice its 90-day daily average volume. It dropped 2.8 per cent to 2,958.5 pence, after it said that its fostamatinib drug, an oral treatment for rheumatoid arthritis, failed to meet one of the main objectives in a study.

Evraz, the Russian steelmaker partly owned by billionaire Roman Abramovich, led basic-resource producers lower, falling 2.7 per cent to 256.6 pence.

Mining company Centamin tumbled 47 per cent to 27.7 pence after the company said Egyptian General Petroleum Corp will not supply it with diesel for the Sukari gold mine until it pays a bill for $65 million.

EUROPE

National benchmark indexes retreated in 11 of the 18 western European markets, with Germany’s DAX declining 0.4 per cent and France’s CAC 40 decreasing 0.1 per cent.

The Stoxx Europe 600 Index lost 0.4 per cent to 279.63 at the close, its first decline this month. The equity benchmark has still increased 14 per cent in 2012.

Deutsche Bank AG slid 2.7 per cent to €33.35 after Germany’s biggest lender said fourth-quarter profit will fall short of estimates. UBS dropped 1.1 per cent to 15.08 Swiss francs after a person familiar with the matter said regulators may fine the bank more than $1 billion for trying to rig interest rates.

Volvo retreated 4.3 per cent to 91.85 kronor as Renault sold its remaining stake in the Swedish truckmaker to increase funding. Renault’s shares climbed 1.5 per cent to €40.22.

US

The Standard and Poor’s 500 Index snapped a six-day gain after US House Speaker John Boehner said the White House is not serious about cutting spending, offsetting a better-than-estimated jobless claims report.

Phillips 66, the crude refiner that was spun off from ConocoPhillips in May, dropped 3.1 per cent on plans to raise as much as $400 million in an initial public offering, while CVS Caremark, the largest provider of prescription drugs in the US, climbed 1.9 per cent after forecasting profit that beat analysts’ estimates.

– (Additional reporting: Bloomberg / Reuters)