Wednesday, September 28, 2011

European Stocks Slide, Snapping Three-Day Rally; Man Group Sinks on Assets

European stocks fell, snapping the biggest three-day rally in 16 months, after a report that some countries are demanding private creditors take bigger writedowns on Greek bonds.

Man Group Plc (EMG) sank the most in almost three years as the world’s biggest hedge fund said assets under management will decrease. Cairn Energy Plc (CNE) slid 5 percent after abandoning an exploration well. PSA Peugeot Citroen, Europe’s second-largest carmaker, declined 1.3 percent as Goldman Sachs Group Inc. advised selling the shares.

The Stoxx Europe 600 Index slipped 0.2 percent to 229.45 at 2:54 p.m. in London after earlier rising 0.5 percent. The gauge had surged 7 percent over the past three days, the biggest rally since May 2010, amid speculation policy makers will increase efforts to contain the region’s debt crisis. The Financial Times reported late yesterday that some euro-area countries are demanding private creditors take bigger writedowns on their Greek bond holdings.

“We’re evaluating how much banks must take in additional provisions,” said Pierre Mouton, a fund manager at Notz Stucki & Cie. in Geneva, who helps oversee $7.5 billion. “The market would be able to forget all of this if the problem stops at Greece. What is stopping the market from rebounding is concern about Italy.”

National benchmark indexes fell in 9 of the 18 western European markets. Germany’s DAX Index added 0.5 percent and France’s CAC 40 Index rose 0.1 percent. The U.K.’s FTSE 100 Index retreated 0.6 percent.

Greek Aid
German Chancellor Angela Merkel said today that she’s waiting for a report from the European Union, European Central Bank and International Monetary Fund on Greece’s budget progress before deciding whether revisions are needed to the financing package agreed in July. Euro-area leaders announced 159 billion euros ($229 billion) in new aid for Greece on July 21 and cajoled bondholders into footing part of the bill.

Greek banks rallied today. National Bank of Greece SA (ETE) jumped 5.6 percent to 2.84 euros. Alpha Bank SA surged 12 percent to 1.41 euros and Piraeus Bank SA (TPEIR) soared 6.5 percent to 49 euro cents.

The EU proposed a financial-transactions tax that would take effect in 2014 and raise about 57 billion euros a year. The plan would set minimum tax rates for financial transactions throughout the 27-nation region, the European Commission said.

26% Drop
The Stoxx 600 fell 26 percent from this year’s peak in February through Sept. 22 amid concern the European debt crisis is spreading and the global economic recovery is faltering. The decline left the measure trading at 9 times estimated earnings, the cheapest since March 2009, data compiled by Bloomberg show.

Orders for U.S. capital goods climbed in August by the most in three months a sign business investment continues to support the recovery. Bookings for goods like computers and communications gear, excluding military hardware and aircraft, climbed 1.1 percent, the most since May, a Commerce Department report showed today. Demand for total durable goods dropped 0.1 percent, less than forecast.

Man Group tumbled 21 percent to 190.2 pence, the biggest drop since November 2008, after saying its assets under management will decline by $6 billion amid “suppressed” demand for investment products.

“The extreme volatility of markets in recent months has created challenging performance conditions across asset classes,” Chief Executive Officer Peter Clarke said. “This has tested investor appetite for risk.”

Cairn Slips
Cairn Energy sank 5 percent to 280.7 pence. The company said the Delta-1 exploration well off Greenland is being plugged and abandoned after failing to find hydrocarbons.

Peugeot declined 1.3 percent to 16.70 euros. The stock was cut to “sell” from “neutral” at Goldman.

SAP AG (SAP) advanced 2.4 percent to 38.76 euros. The software maker has a “very well-filled contract pipeline” and “good results” will continue even as global economic growth is slowing, Finanz und Wirtschaft reported, citing an interview with Robert Enslin, head of global sales.

BG Group Plc (BG/) climbed 3 percent to 1,257 pence after Goldman Sachs Group Inc. added the oil producer to its “conviction buy” list.

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