European stocks and U.S. index futures fell, with the Stoxx Europe 600 Index snapping its biggest three-day rally since May 2010, as the economies of the euro area and Germany grew at a slower-than-estimated pace. Asian shares rose.
Terna Rete Elettrica Nazionale SpA (TRN) retreated 10 percent as investors speculated that taxes will lessen the Italian power- grid operator’s earnings. Enel SpA (ENEL), Italy’s largest power producer, decreased 5.5 percent. Severn Trent Plc (SVT), Pennon Group Plc (PNN) and United Utilities Group Plc (UU/) declined more than 1 percent as Goldman Sachs Group Inc. recommended selling the shares of the U.K. utilities.
The benchmark Stoxx 600 slid 1.4 percent to 234.43 at 12:09 p.m. in London. The gauge has tumbled 19 percent since this year’s high on Feb. 17 amid concern that global economic growth is faltering.
“Macro surprises for the euro zone and the U.S. do not show convincing signs of a bottom,” wrote Bernd Meyer, the head of cross-asset strategy at Commerzbank AG in Frankfurt, in a report. “One should only add to risk assets if the macro outlook stabilizes.”
Futures on the Standard & Poor’s 500 Index expiring in September retreated 1.3 percent. The MSCI Asia Pacific Index gained 0.2 percent.
Gross domestic product in the 17-nation euro area rose 0.2 percent from the first quarter, when it increased 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement today. That’s the worst performance since the euro region emerged from a recession in late 2009. Economists had forecast the economy to expand 0.3 percent, according to the median of 34 estimates in a Bloomberg News survey.
Germany’s Economy Slows
Germany’s economy, Europe’s largest, almost stalled in the second quarter. Gross domestic product, adjusted for seasonal effects, climbed 0.1 percent from the first quarter, when it jumped a revised 1.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists had predicted growth of 0.5 percent, according to the median of 33 estimates in a Bloomberg News survey.
The Stoxx 600 had rallied 6.4 percent over the past three days after a global equity rout left stocks trading at their cheapest valuation since March 2009 amid concern the economic recovery is stalling. The gauge traded at 9.7 times the estimated earnings of its companies, according to data compiled by Bloomberg. That compares with the average multiple of 12.2 over the past five years.
Warren Buffett Buys
Billionaire investor Warren Buffett used the slump to buy stocks. His Berkshire Hathaway Inc. made its biggest bets on the stock market this year on Aug. 8 as the S&P 500 plunged the most since December 2008.
“I like buying on sale,” Buffett, Berkshire’s chief executive officer and head of investments, said in a television interview with Charlie Rose to be broadcast on PBS. “Last Monday, we spent more money in the stock market buying than any day this year.”
Reports on U.S. house building and industrial production today may provide investors with clues to the health of the world’s largest economy.
Housing starts fell 4.6 percent to a 600,000 annual rate, according to the median estimate of 77 economists surveyed by Bloomberg News before the homebuilding report due from the Commerce Department at 8:30 a.m. in Washington. Survey estimates ranged from 570,000 to 650,000, after a 629,000 pace in June that was the highest rate in five months.
At 9:15 a.m., the Federal Reserve may report that industrial production grew 0.5 percent in July after a 0.2 percent gain in June, according to the median estimate.
Severn Trent, Pennon
Terna plunged 10 percent to 2.59 euros and Enel slid 5.5 percent to 3.43 euros. Snam Rete Gas SpA (SRG), the owner of Italy’s natural-gas grid, tumbled 11 percent to 3.29 euros.
Italy approved a law at the weekend that increased the tax on power generators to 10.5 percent from 6.5 percent and extended the levy to distribution and transmission companies. Prime Minister Silvio Berlusconi’s government will get 1.8 billion euros ($2.6 billion) in 2012 and 900 million euros in the following two years from the tax changes, according to UniCredit SpA.
Severn Trent retreated 2.1 percent to 1,463 pence after the company was downgraded to “sell” from “neutral” at Goldman Sachs. The brokerage also cut Pennon, which fell 1.4 percent to 658.5 pence, and United Utilities, which slipped 1.6 percent to 589.5 pence, to “sell.”
Intercell AG (ICLL) surged 13 percent to 2.83 euros as the Austrian vaccine maker said its second-quarter loss narrowed to 1.6 million euros from 8.35 million euros a year earlier. That beat the average estimate of eight analysts surveyed by Bloomberg for a loss of 8.7 million euros.
Lundin Petroleum AB (LUPE) rallied 4.4 percent to 83.30 kronor. Statoil ASA, Norway’s biggest oil and gas producer, said two North Sea discoveries are probably part of a single field that may be the country’s largest oil find since the 1980s. Aldous- Avaldsnes is located west of Lundin’s Avaldsnes find.
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