BLBG: Europe Stocks Fall Most in Three Weeks Amid Greece as Banks Drop
European stocks fell the most since March, extending their first weekly drop in three, as banks led losses.
The Stoxx Europe 600 Index slid 1.3 percent to 405.43 at 12:16 p.m. in London. The gauge slumped, along with China’s equity-index futures, after regulators in the world’s second-biggest economy clamped down on the use of shadow financing to buy stocks and expanded the supply of shares available for short sellers.
Investors are also watching developments in Greece after International Monetary Fund Managing Director Christine Lagarde warned that she wouldn’t let the country miss a debt payment.
Stocks are falling after rallying to a fresh peak Wednesday, down 1.8 percent for the week. The Stoxx 600 has climbed 18 percent this year amid quantitative-easing measures by the European Central Bank. That has pushed the gauge to its highest level relative to the projected profit of its members in at least a decade, data compiled by Bloomberg show.
“We’ve become a bit more cautious over the past few months because markets have been rallying pretty rapidly,” said Dirk Thiels, head of investment management at KBC Asset Management in Brussels. “Expectations for an earnings rebound in Europe make sense, but valuations are pricing in a lot. Stocks are still pretty close to a record.”
The volume of Stoxx 600-listed shares traded was 36 percent higher than the 30-day average, data compiled by Bloomberg show. Banco de Sabadell SA and Banco Comercial Portugues SA tumbled more than 4 percent, pushing lenders to the worst performance among 19 industry groups.
Greek Deadlock
The Greek ASE Index slipped 0.9 percent, with the country’s bonds heading for the worst week since the aftermath of Syriza’s election. The government’s negotiations are in a deadlock with creditors as it fights to win aid to prevent a default, while resisting more austerity measures.
“The major macro thing at play now is the Greek saga,” Thiels said. “There’s a low chance of a Greek exit, but anything between that and a full-fledged rescue is also possible.”
Among stocks moving on corporate news, Syngenta AG dropped 4.3 percent after first-quarter sales missed projections. SKF AB tumbled 7.1 percent after reporting profit below estimates. Abertis Infraestructuras SA fell 2.7 percent as an investor sold a stake.
Qinetiq Group Plc climbed 4.3 percent after Barclays Plc upgraded shares of the U.K. defense company, citing dividend yield prospects.
