MW: Europe stocks drop as crisis-resolution hopes fade
Shares of oil giant BP rise after settlement with Anadarko
By Polya Lesova, MarketWatch
LONDON (MarketWatch) — European stock markets dropped Monday as hopes faded that a comprehensive solution to the euro-zone debt crisis will be announced at a summit this weekend.
The pan-European Stoxx 600 index XX:SXXP -0.96% fell 1% to end at 236.22 after rising as high as 241.96.
The “reason for the turnaround is the German comments that hoping for solution to all problems by Monday is not likely to happen,” said Steen Jakobsen, chief economist at Saxo Bank, in emailed comments.
“Europe has a history of producing so-called ‘mini max’ solutions — the lowest common denominator in everything they do,” he added. Read more on big hurdles ahead for Europe.
A spokesman for German Chancellor Angela Merkel warned investors not to expect Sunday’s summit of European leaders to produce a comprehensive fix to the crisis. Hopes about a deal had risen over the weekend after the Group of 20 meeting in Paris, where global finance leaders reiterated the importance of solving the crisis decisively and quickly.
Monday’s losses came after three consecutive weeks of gains for the Stoxx 600.
Bank stocks sink
European banks were among the big decliners Monday, as investors continued to worry about their exposure to peripheral euro-zone debt. Debt-laden Greece braced itself for more social unrest this week ahead of a parliamentary vote on further austerity measures.
In Athens, the ASE Composite index sank 3% to 752.59, weighed down by banks. Piraeus Bank dropped 9.1% and Alpha Bank declined 9.4%. National Bank of Greece NBG -9.65% fell 10.4%.
In Italy, banks UniCredit SpA IT:UCG -6.12% and Intesa Sanpaolo SpA IT:ISP -5.32% fell 6.1% and 5.3%, respectively. In Belgium, troubled lender Dexia SA BE:DEXB -16.72% slumped nearly 17%.
In Germany, the DAX 30 index DX:DAX -1.81% fell 1.8% to 5,859.43, with Commerzbank AG DE:CBK -6.73% down 5.7% and Deutsche Bank AG DB -4.94% DE:DBK -2.00% down 3.1%.
France’s CAC 40 index FR:PX1 -1.61% declined 1.6% to 3,166.06, as banking group BNP Paribas FR:BNP -3.72% fell 3.7%. Standard & Poor’s Ratings Services downgraded BNP’s credit ratings late Friday by one notch.
Among other stocks making big moves, shares of SGL Carbon SE DE:SGL +10.14% rallied 12.5% in Frankfurt after Germany’s Der Spiegel magazine reported that car maker BMW AG DE:BMW -3.57% wants a stake in the carbon-products maker. A representative for BMW couldn’t be reached for comment.
Air France-KLM, Philips
In Paris, shares of Air France-KLM FR:AF +1.43% rose 1.4% after media reports said the airline plans to replace Chief Executive Pierre-Henri Gourgeon at a board meeting later Monday.
In Amsterdam, Royal Philips Electronics N.V. NL:PHIA -1.89% slipped 1.9%. The firm reported a steep drop in third-quarter net profit and said it will cut 4,500 jobs as part of a program to save 800 million euros ($1.1 billion).
The U.K.’s FTSE 100 index UK:UKX -0.54% fell 0.5% to 5,436.70.
Oil group BP PLC’s shares BP +0.98% UK:BP +2.20% rose 2.2%. Anadarko Petroleum Corp. APC +3.81% and BP said they have agreed to settle their dispute tied to the 2010 Deepwater Horizon oil-rig disaster in the Gulf of Mexico. Anadarko will pay the British integrated oil firm $4 billion and the two companies will mutually drop their claims against each other.
Insurer Aviva PLC UK:AV +0.29% rose 0.3% after UBS upgraded the stock to buy from neutral.
Shares of G4S PLC UK:GFS -22.10% slumped more than 22% to 220 pence and were the biggest decliner on the FTSE 100. The security firm said it would acquire Denmark’s ISS A/S, a provider of facilities services, for an enterprise value of 5.2 billion pounds ($8.2 billion). G4S also announced a rights issue at 122 pence to raise £2 billion. Read more on London Markets.
The drop in G4S’s shares reflects “the rights issue element of the acquisition, in addition to the potential transaction risks involved with a deal of this size, the dilutive effects of a shift away from security and the increased exposure to Europe that a combination with ISS would bring,” said Jonathan Jackson, head of equities, Killik & Co., in a note.
In Zurich, shares of Barry Callebaut AG CH:BARN +2.30% rose 2.3% after the chocolate company was upgraded to outperform from neutral at Credit Suisse.
