European stocks fell, trimming the Stoxx Europe 600 Index’s largest weekly advance in 14 months, as reports on Chinese manufacturing and German retail sales added to concern the economy is slowing. Asian shares and U.S. index futures declined.
Deutsche Bank AG (DBK) lost 7.1 percent as Handelsblatt reported that Germany’s biggest lender may lower its profit target. Metro AG (MEO) fell 4.2 percent after German retail sales declined the most in more than four years in August. Royal Philips Electronics NV tumbled 5.7 percent as HSBC Holdings Plc cut its earnings estimates for the company.
The Stoxx 600 fell 1.6 percent to 225.24 at 12:51 p.m. in London. The measure has rallied 4.2 percent this week as policy makers increased efforts to contain the region’s debt crisis and U.S. jobs and growth data exceeded forecasts. The gauge is still heading for the biggest quarterly decline since 2008, having plunged 18 percent since the end of June. The index has dropped 5.3 percent in September, a fifth straight month of losses.
“The situation is quite dark right now,” said Philipp Musil, who helps manage about $11 billion at Semper Constantia Privatbank AG in Vienna. “We’re very cautious about equities. All in all the figures are not good and many investors think we’re going straight into a recession.”
The MSCI Asia Pacific Index slid 0.9 percent today as a gauge of Chinese manufacturing shrank for a third month. Standard & Poor’s 500 Index futures fell 1.2 percent before reports that may show U.S. consumer spending cooled and business activity expanded at a slower pace.
Chinese Economy
In China, the reading of 49.9 for the September purchasing managers’ index, released by HSBC Holdings Plc and Markit Economics today, was unchanged from August and compared with a preliminary 49.4 figure published last week. The gauge was below 50, the level that separates expansion from contraction, for eight months through March 2009.
In the U.S., personal spending rose 0.2 percent in August after a 0.8 percent gain in July, according to the median estimate of 81 economists surveyed by Bloomberg News. The figures are also projected to show incomes rose 0.1 percent, the smallest increase in nine months. The Commerce Department’s report is due at 8:30 a.m. in Washington.
The Institute for Supply Management-Chicago Inc.’s business barometer eased to 55 this month from 56.5 in August, according to the median forecast of economists surveyed. Readings greater than 50 signal growth. The University of Michigan’s final confidence index for the month was probably 57.8, unchanged from a preliminary reading issued two weeks ago and up from August’s 55.7, the lowest since November 2008.
‘Boost Sentiment’
A stronger-than-expected Chicago ISM number “could help boost sentiment in a market that is probably positioned for further downside,” said Ben Potter, a market strategist at IG Index in Melbourne. “If economic data begins to improve, we wonder whether it may take a little bit of the focus off of the euro-zone crisis.”
European inflation unexpectedly accelerated to the fastest in almost three years in September, complicating the European Central Bank’s task as it fights the region’s worsening sovereign-debt crisis. The euro-area inflation rate jumped to 3 percent from 2.5 percent in August, the European Union’s statistics office said. That’s the biggest annual increase in consumer prices since October 2008.
Deutsche Bank Drops
Deutsche Bank slid 7.1 percent to 26.24 euros. The bank may lower its target for achieving a record 10 billion euros ($13.6 billion) in profit this year, Handelsblatt reported, citing unidentified people close to the management board.
BNP Paribas (BNP) SA and Societe Generale (GLE) SA, France’s biggest banks, fell 4.2 percent to 29.84 euros and 8.4 percent to 19.30 euros, respectively. UBS AG downgraded Societe Generale to “neutral” from “buy” and cut its price forecast on the stock to 21 euros from 35 euros, while reducing its price estimate on BNP to 31 euros from 36 euros.
Metro, Germany’s largest retailer, dropped 4.2 percent to 31.95 euros. German retail sales, adjusted for inflation and seasonal swings, slumped 2.9 from July, when they rose 0.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists had forecast a 0.5 percent decline, according to the median of 18 estimates in a Bloomberg survey.
Philips slumped 5.7 percent to 13.32 euros in Amsterdam trading after HSBC cut its earnings estimates by 20 percent to 30 percent for the next two years and predicted “many challenges” for the Dutch electronics company.
Philips Falls
“Philips’ figures could certainly be better and generally more and more earnings are being revised down,” said Markus Huber, head of German sales trading at ETX Capital in London. “I wouldn’t be surprised if the company cut its forecast. Consumers might scale back in the short term because of the prevailing uncertainty.”
Luxury-goods stocks declined as the gauge of Chinese manufacturing indicated a contraction. Swatch AG slid 6.2 percent to 304.80 francs. The world’s largest watchmaker makes 33 percent of its revenue in greater China, according to Bloomberg data. Burberry Group Plc (BRBY), the U.K.’s largest luxury- goods maker, lost 5.6 percent to 1,134 pence. The company makes 33 percent of its revenue in the Asia Pacific region, Bloomberg data shows.
Bayerische Motoren Werke AG (BMW) and Daimler AG (DAI), the world’s biggest makers of luxury cars, led declines in European automakers as the industry posted the worst performance of all 19 groups in the Stoxx 600. BMW slid 6.8 percent to 49.15 euros while Daimler fell 4.3 percent to 33.32 euros. Daimler sells 10 percent of its vehicles in China, Bloomberg data show.
Lundin Petroleum AB (LUPE) surged 29 percent to 114.90 kronor in Stockholm, the biggest gain in at least 10 years, after saying its Avaldsnes prospect may contain contingent resources of 800 million to 1.8 billion barrels of recoverable oil.
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