European equities slid as two Federal Reserve officials said the central bank shouldn’t act to protect stock investors and Swedish regulators said lenders are unprepared for a freeze in money markets. U.S. index futures and Asian shares retreated.
Dexia SA (DEXB) led banks lower as the Wall Street Journal also said that U.S. regulators are stepping up scrutiny of Europe’s largest lenders. A gauge of European carmakers plunged almost 4 percent. Holcim Ltd. (HOLN) sank 6.3 percent as the world’s second- biggest cement maker reported profit that missed estimates.
The benchmark Stoxx Europe 600 Index lost 2.4 percent to 232.38 at 11:18 a.m. in London, the biggest drop in a week. The gauge has tumbled 20 percent from this year’s peak in February amid concern that Europe will fail to contain its sovereign-debt crisis and that the economic recovery in the U.S. will falter. The MSCI Asia Pacific Index fell 1.6 percent today and Standard & Poor’s 500 Index futures slid 1.8 percent.
“Concern from regulators on banks’ funding and the Plosser and Fisher comments add to uncertainty,” Henrik Drusebjerg, a senior strategist at Nordea Bank AB (NDA) in Copenhagen, said in a telephone interview. “U.S. politicians can’t agree and, if the Fed can’t sort things out internally either, there’s really not much left to pin a direction of the market on. Investors are more likely to see the glass as half empty than half full.”
Plosser, Fisher
Federal Reserve Chairman Ben S. Bernanke’s pledge last week to keep interest rates near zero until mid-2013 was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Fed Bank of Philadelphia, said yesterday in a Bloomberg Radio interview.
Dallas Fed President Richard Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement.
The S&P 500 rose as much as 28 percent after Bernanke foreshadowed a second round of so-called quantitative easing on Aug. 27 of last year. The central bank finished the program of asset purchases at the end of June. Bernanke may announce policy intentions at a conference in Jackson Hole, Wyoming, on Aug. 26.
“The comments from Plosser and Fisher put focus back on how committed the Fed is to the zero-interest rate policy ahead of Bernanke’s comments next week,” said Anders Eklof, a currency strategist at Swedbank in Stockholm. “The Fed has obviously been wrong about the economy, once last summer and then now.”
U.S. Economy
A report at 8:30 a.m. in Washington may show the number of new U.S. job seekers applying for unemployment insurance rose by 5,000 to 400,000 in the week ending Aug. 13, according to a Bloomberg survey of economists.
Separate releases at 10 a.m. may show that sales of previously owned houses climbed to a 4.9 million annual pace in July from a seven-month low in June and the Conference Board’s index of leading U.S. indicators grew 0.2 percent last month after a 0.3 percent gain the prior period.
Dexia, Belgium’s biggest lender, led a gauge of banks in the Stoxx 600 to a second day of losses, falling 8 percent to 1.68 euros. HSBC Holdings Plc (HSBA), Europe’s biggest bank by market value, declined 3.2 percent to 524.6 pence.
The WSJ reported that U.S. regulators are stepping up scrutiny of local operations for Europe’s largest banks on concern that the sovereign debt crisis may lead to funding problems. The Federal Reserve Bank of New York has been holding talks with the lenders and sought information about their access to funds to maintain operations in the U.S., the newspaper said, citing people it didn’t identify.
Swedish Banks
Swedbank AB (SWEDA) slipped 5.2 percent to 87.05 kronor in Stockholm. Nordea Bank AB, Sweden’s biggest bank fell 3.7 percent to 56.85 kronor.
Swedish banks must do more to prepare for a deterioration in Europe’s debt crisis that could freeze interbank markets and cut off funding, said Lars Frisell, chief economist at the country’s financial regulator.
“It won’t take much for the interbank market to collapse,” Frisell said yesterday in an interview in Stockholm. “It’s not that serious at the moment but it feels like it could very easily become that way and that everything will freeze.”
Fiat SpA (F) fell 7.2 percent to 4.56 euros to pace European automakers lower as the industry gauge fell the most of the 19 industry groups in the Stoxx 600. Continental AG (CON) , Europe’s second-largest auto-parts supplier, retreated 5.9 percent to 50.81 euros.
Holcim Drops
Holcim sank 6.3 percent to 44.86 Swiss francs after reporting second-quarter net income of 347 million francs ($437 million), missing the 373.3 million-franc average estimate of seven analysts in a Bloomberg survey. Sales dropped 11 percent to 5.49 billion francs, compared with an estimate of 5.56 billion francs.
HeidelbergCement AG (HEI), the world’s third-largest maker of cement, dropped 5.5 percent to 30.44 euros in Frankfurt.
Royal Boskalis Westminster NV plunged 11 percent to 23.46 euros, the largest drop since 2008. The world’s biggest dredging company said first-half net income fell to 114 million euros ($164 million) from 124 million euros a year earlier. The average estimate in a Bloomberg survey of five analysts was for profit of 116 million euros.
SABMiller Plc (SAB) retreated 3.1 percent to 2,073 pence after the board of Australian brewer Foster’s Group Ltd. rejected its hostile A$9.5 billion ($10 billion) takeover bid. The London- based brewer may have to raise its offer by 6 percent to A$5.20 a share to win over investors, according to the median estimate of 13 analysts surveyed by Bloomberg News.
Coloplast A/S, the world’s largest maker of ostomy and urology products, rose 6.8 percent to 776.5 kroner in Copenhagen after reporting third-quarter net income of 485 million kroner ($94 million), beating the average analyst estimate of 433 million kroner.
To contact the reporter on this story: Peter Levring in Copenhagen at Plevring1@bloomberg.net or
To contact the editor responsible for this story: Andrew Rummer in London at arummer@bloomberg.net;
