China posts largest monthly trade deficit in at least 12 years
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets fell in choppy trade Monday led by banks and resource firms as investors took in the biggest China trade deficit in at least 12 years and news that a Greek credit event had been declared.
The Stoxx Europe 600 index XX:SXXP -0.16% fell 0.3% to 264.39, snapping a three-session winning streak.
Miners and oil firms weighed on markets as a surprisingly large Chinese trade deficit in February fueled concerns of slower demand in the world’s second largest economy and dragged commodity prices lower. The country reported a $31.48 billion deficit on Saturday after a $27.28 billion surplus in January, and well above economists estimates of $8.5 billion.
In London, heavyweight miner Rio Tinto PLC UK:RIO -0.98% RIO -0.53% declined 1.3% and Vedanta Resources PLC UK:VED -3.03% was off 3.5%.
The FTSE 100 index UK:UKX -0.09% fell 0.1% to 5,878.83, further weighed by energy firms. Petrofac Ltd. UK:PFC -0.99% lost 1.4%, Tullow Oil PLC UK:TLW -0.83% shed 0.9%, while Royal Dutch Shell PLC UK:RDSA -0.55% UK:RDSB -0.61% RDS.A -0.45% RDS.B -0.57% was off 0.8%.
Man Group PLC UK:EMG -1.57% dropped 2% after HSBC downgraded the stock to neutral from overweight.
Banks were also down in London and shares of HSBC Holdings PLC UK:HSBA -0.07% HBC -0.62% lost 0.3%, Royal Bank of Scotland PLC UK:RBS -2.01% RBS -2.55% shed 2.4% and Barclays PLC UK:BARC -1.81% BCS -2.05% fell 2.1%.
The broader European banking sector was on decline as investors continued to focus on Greece’s debt. Yields on new Greek government bonds issued after the country succeeded in its debt restructuring last week surged to the highest level in the euro zone, indicating that market participants remain skeptical about Greece’s ability to reach a sustainable debt level.
The International Swaps and Derivatives Association said late Friday that the debt restructuring qualified as a credit event, which triggers a payout for credit default swaps used as insurance against a Greek default. Euro-zone finance ministers meet later in Brussels and are expected to sign off on Greece’s second bailout.
The Athens General Index GR:GD -2.15% traded 1.9% lower at 737.81, pulled down by National Bank of Greece SA GR:ETE -3.09% off 5.6%.
“This is not to say the story, or in Greece’s case, the odyssey, is far from over. Debt sustainability in the euro zone is a long way off and for some the reality is it may not be achieved,” said Mike Lenhoff, chief strategist at Brewin Dolphin, in a note.
“Also, who knows if Portugal is next in line for a debt restructuring? Moreover, for a good part of the euro zone, economic hardship will prevail in the indefinite future,” he said.
In France, Societe Generale SA FR:GLE -1.06% traded 1.3% lower and BNP Paribas SA FR:BNP -0.49% was off 0.8%, adding pressure to the CAC 40 index FR:PX1 -0.07% , which was off 0.3% at 3,477.14.
Further weighing on the index, oil group Total SA FR:FP -0.81% slipped 1.1% as UBS cut the stock to neutral from buy, citing limited further upside at current levels. GDF Suez SA FR:GSZ -1.32% shed 1.5% after Exane BNP Paribas downgraded the stock to neutral. Oil stocks were also under pressure as oil prices fell.
On a more positive note, Veolia Environnement SA FR:VIE +1.59% gained 1.6% as Morgan Stanley upgraded the company to overweight from equalweight.
Hotel group Accor SA FR:AC +2.60% jumped to the top of the index and added 2.5% as Credit Suisse upgraded the stock to outperform
The German DAX 30 index DX:DAX +0.16% fared the best so far among the major country-specific indexes, up 0.1% to 6,868.53.
Volkswagen AG DE:VOW -0.51% slipped 1%. The company confirmed results for 2011 that were pre-released. The company said 2012 operating profit will remain steady, but new technology costs will offset car sales and overall revenue.
Electric utilities firm E.ON AG DE:EOAN -0.78% was also lower, off 1.3%, as Deutsche Bank cut its price target to €21 from €23, citing near-term commodity headwinds.
Bucking the trend, BMW AG DE:BMW +1.05% added 0.9% after UBS increased its revenue growth estimates and raised its price target by €12 to €68.
