Tobacco firms drop after Australian branding ruling
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — The recent rally in European equities lost steam on Wednesday, as stock markets tracked losses on Wall Street and in Asia on waning expectations of further central-bank action to boost the global economy.
The Stoxx Europe 600 index XX:SXXP -0.21% fell 0.2% to 269.96. On Tuesday, the index closed at its highest level since March 19 on continued hopes for additional policy easing. Better-than-expected growth data from Germany also fueled investor confidence. The gain marked a sixth advance within the past eight trading sessions.
Tobacco firms were among notable decliners on Wednesday, after the industry failed to overturn a court ruling in Australia forcing companies to remove almost all branding from cigarettes packets. See: Tobacco giants fail to stop new Australia law
British American Tobacco PLC UK:BATS -1.55% BTI -0.14% fell 0.5% and Imperial Tobacco Group PLC UK:IMT -1.70% ITYBY -0.45% slid 1.4%.
For the broader European markets, stocks tracked losses on global bourses. U.S. stocks ended lower Tuesday, after a surprisingly strong rise in retail sales dampened expectations of further quantitative easing. A Financial Times report that Greece is going to seek a two-year extension of its austerity program also dented buying appetite.
“If the extension is granted, Greece will need an additional 20 billion euros ($24.6 billion) in funding and would be raised from an existing IMF loan and T-bills issuance,” analysts at Deutsche Bank said in a note.
Stocks in Europe, however, pared losses in midmorning action after data showed the U.K. unemployment rate for second quarter fell to 8% from 8.2% in the first quarter, while the claimant count fell by 5,900 in July. See: U.K. unemployment falls to 8% in second quarter.
In addition, minutes showed the Bank of England’s policy makers earlier this month voted unanimously to keep its interest rate at a record low. See: BOE unanimous in Aug. monetary policy decision
The U.K. FTSE 100 index UK:UKX -0.36% traded 0.4% lower at 5,844.51, as losses for the tobacco firms weighed.
Miners also added pressure in London, as metals prices declined across the board. Heavyweight Rio Tinto PLC UK:RIO -4.31% RIO -0.95% lost 3.1% and BHP Billiton PLC UK:BLT -1.75% BHP -0.46% tripped 2.1%.
Vodafone PLC UK:VOD -0.82% VOD +0.23% fell 0.9% after Bank of America Merrill Lynch cut the stock to neutral from buy.
Standard Chartered PLC UK:STAN +4.16% bucked the trend and gained 4.5% as it late Tuesday agreed to pay $340 million to New York’s Department of Financial Services following allegations of money laundering in Iran. See: Standard Chartered to pay regulator $340 mln
Spanish stocks were on the decline, with the IBEX 35 index XX:IBEX -0.41% 0.3% lower at 7,101.80. European Economic and Monetary Affairs Commissioner Olli Rehn signaled in an interview with Bloomberg Television on Tuesday that the Spanish government is considering a request for a bailout.
In France, heavyweight oil group Total SA FR:FP -0.34% TOT +0.14% slipped 0.4%, weighing on the CAC 40 index FR:PX1 -0.34% , which was off 0.3% at 3,441.30.
Steelmaker ArcelorMittal SA FR:MT -1.56% fell 2.2%.
Among German stocks, car makers added pressure. Volkswagen AG DE:VOW3 -0.89% DE:VOW -0.35% lost 0.9% and Daimler AG DE:DAI -0.34% fell 0.9%.
The DAX 30 index DX:DAX -0.48% was off 0.4% at 6,944.71, further weighed by Allianz SE DE:ALV -1.10% , which was 1.1% lower.
Outside the major indexes, brewer Carlsberg AS DK:CARLB +2.16% added 2.3% after reporting a 63% rise in second-quarter profit, boosted by the sponsorship of the Euro 2012 soccer championship. See: Carlsberg net profit rises 63%.
Sara Sjolin is a MarketWatch reporter, based in London.
