European Stocks Fall to 1-Year Low; Marks
European stocks dropped to the lowest in more than a year, led by retailers and energy companies, after sales at Marks & Spencer Group Plc missed analysts’ estimates and Merrill Lynch & Co. cut its profit outlook for BP Plc.
Marks & Spencer, the U.K.’s largest clothing retailer, plunged 19 percent. Tesco Plc, Next Plc and Carphone Warehouse Group Plc also tumbled in the biggest selloff in retail stocks since Sept. 11, 2001. BP slid to a three-week low after Merrill slashed its fourth-quarter profit estimate 25 percent for the oil company.
The Dow Jones Stoxx 600 Index fell 1.4 percent to 348.61 at 10:20 a.m. in London, the lowest since October 2006. The gauge has retreated 4.4 percent so far this year on concern credit market losses and an economic slowdown will damp profit growth.
“The size of Marks & Spencer means they stand for a market this is looking difficult,” said Lucy MacDonald, who helps manage $100 billion as chief investment officer of global equities at RCM Ltd. in London. “Market conditions have become more difficult and it looks as if they are going to remain like that for the rest of the year.”
The risk of European companies defaulting climbed to the highest in more than five months on slowing sales by retailers. Ten-year U.S. Treasury notes fell, snapping an eight-day rally, as higher commodity prices and a weaker dollar sparked speculation that inflation will quicken.
Asian stocks today rose the most this year, led by Newcrest Mining Ltd. and Jiangxi Copper Ltd., after surging demand drove prices of metals to records. U.S. index futures advanced.
National benchmarks dropped in all 17 western European markets that were open. The U.K.’s FTSE 100 sank 1.3 percent, while Germany’s DAX fell 0.7 percent. France’s CAC 40 lost 1 percent.
Marks & Spencer
Marks & Spencer tumbled a record 19 percent to 409.75 pence after the retailer reported its first same-store sales decline in 2 1/2 years. Revenue fell 2.2 percent at stores open at least a year in the fiscal third quarter ended Dec. 29. The median estimate of eight analysts surveyed by Bloomberg News was for growth of 1.1 percent.
“It’s going to get tougher,” said Edward Collins, a London-based fund manager at New Star Asset Management Group Plc, who helps manage about $41 billion. “Analysts are going to bring back their profits estimates for 2008.”
Tesco, the U.K.’s biggest retailer, slid 5.3 percent to 418.75 pence. Next, Britain’s third-largest clothing retailer, lost 6.5 percent to 1,315 pence free credit report online. Carphone Warehouse, Europe’s biggest retailer of handsets, sank 2.4 percent to 330 pence.
The Stoxx 600 Retail Index dropped 5 percent, its steepest retreat since Sept. 11, 2001.
Confidence Wanes
U.K. consumer confidence declined in December to a 10-month low as oil prices reached a record and the housing market slowdown deepened, Nationwide Building Society said.
An index of sentiment taken from a survey of 1,000 people lost 1 point to 85, the lowest since February 2007, Britain’s fourth-biggest mortgage lender said today.
BP declined 3.6 percent to 611 pence, the lowest since Dec. 19, after Merrill cut its fourth-quarter net income estimate by 25 percent to $4.4 billion, citing higher than forecast field commissioning costs, weaker-than-expected marketing margins and higher taxes. The brokerage cut its forecast for 2007 earnings per share by 7 percent to 45.6 pence.
TUI AG dropped 1.8 percent to 17.72 euros after Europe’s largest travel company said it plans to raise 450 million euros ($663 million) by selling bonds exchangeable for part of its stake in TUI Travel Plc as lower-rated companies turn to the equity-linked market for funds.
Spending Softens
Deutsche Telekom AG and BT Group Plc led telephone companies lower after AT&T Inc. of the U.S. said customer spending weakened.
Deutsche Telekom slid 1.1 percent to 15.27 euros. BT Group, Britain’s largest phone company, lost 3.6 percent to 267.75 pence. France Telecom SA, Europe’s third-biggest phone company, declined 1.9 percent to 25.28 euros.
AT&T tumbled the most in almost five years in New York trading yesterday after Chief Executive Officer Randall Stephenson said slowing economic growth led to “softness” in the home-phone and Internet businesses.
The warning and worse-than-expected housing data pushed the Standard & Poor’s 500 Index to the lowest level since March.
StatoilHydro ASA dropped 2.5 percent to 162.3 kroner after Norway’s largest oil company said output from its Arctic Snohvit liquefied natural gas plant is “uncertain” this year because of startup problems.
Production “irregularities” may last into 2009, Chief Executive Officer Helge Lund told reporters on a conference call today. The company said last month that the Snohvit LNG plant would start later than expected in the first half of January after technical faults.
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