BLBG: European Stocks Drop for Fourth Day as Commodity Producers Slump
European stocks extended a three-week low, led by a slump in miners.
The Stoxx Europe 600 Index slid 0.3 percent to 338.3 at 11:05 a.m. in London. A gauge of commodity producers slumped 2.4 percent to its lowest level since July 2013. Europe’s benchmark gauge briefly erased losses earlier, after the region’s lenders took up lower-than-estimated loans by the European Central Bank, adding pressure for additional stimulus.
“There is more pessimism coming into the end of this year, but the buyers are still there,” said Francois Savary, chief investment officer of Reyl & Cie. in Geneva. “The U.S. is giving us strong signs of growth and Europe is back on the path of recovery. The case for investing has not changed.”
European stocks have advanced 3.1 percent in 2014. The Stoxx 600 reached an almost seven-year high on Dec. 5, with Germany’s DAX Index rising to a record, amid speculation the ECB will consider quantitative easing at its January meeting. Optimism that the central bank will buy government bonds spurred investors to send money in November to a fund tracking the region’s equities for the first time in five months.
Europe’s lenders took up 130 billion euros ($161 billion) in the ECB’s second round of long-term loans, lower than the median analyst estimate of 148 billion euros. The targeted TLTROs are designed to spur lending to the real economy.
Liquidity Key
“The issue of liquidity in Europe is key,” Reyl’s Savary said. “For European equities to outperform the U.S., which we think they will, you need to have liquidity in the system. Will there be QE? If the TLTROs are not working, the ECB needs to add to existing instruments and find other ways of increasing their balance sheet.”
Commodity producers fell for a sixth day, the longest streak since September. Roubini Global Economics LLC said iron ore may drop to less than $60 a metric ton next year. Rio Tinto Group and BHP Billiton Ltd., the world’s biggest miners, lost more than 1.5 percent. Anglo American Plc fell 2.8 percent to a five-year low, while Glencore Plc dropped 3.4 percent.
Some stocks climbed on mergers-and-acquisitions activity. Telecom Italia SpA gained 2.8 percent. Telefonica SA, Oi SA and Claro SA plan to make an offer for Tim Participacoes SA (TIMP3), according to people familiar with the matter. Telecom Italia owns a 67 percent stake in the Brazilian mobile-phone company.
Nutreco NV added 4.1 percent. Cargill, the largest closely held company in the U.S., said it’s considering making a stand-alone bid for the Dutch animal-feed supplier.
Among other companies moving on corporate news, Fiat Chrysler Automobiles NV slumped 6.6 percent after pricing an offering of 87 million shares at a discount. Inditex SA rose 2.9 percent after the world’s largest clothing retailer reported an increase in nine-month profit and revenue that was in line with analysts’ estimates.
Standard & Poor’s 500 Index futures added 0.3 percent before U.S. data that may show the world’s biggest economy is strengthening. Reports at 8:30 a.m. in Washington may show retail sales rose at a faster pace in November from a month earlier, while initial jobless claims were unchanged last week.
To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Namitha Jagadeesh
