European Stocks Decline, Led by Carmakers on Oil; UBS Advances

By Adam Haigh

Sept. 24 (Bloomberg) -- European stocks fell for a third day as higher oil prices weighed on automakers, overshadowing gains among financial companies after Goldman Sachs Group Inc. won backing from Warren Buffett.

Renault SA dropped 2.9 percent and Daimler AG slipped 1.1 percent as crude oil traded above $109 a barrel. UBS AG added 5.1 percent and Royal Bank of Scotland Group Plc rallied 4.8 percent after Buffett's Berkshire Hathaway Inc. said it's buying $5 billion of perpetual preferred stock in Goldman with a 10 percent dividend. British Energy Group Plc advanced 6.2 percent after Electricite de France SA said it will pay 12.5 billion pounds ($23 billion) for the U.K.'s biggest power producer.

``There are deals to be done by the people that have a lot of cash,'' said Andy Lynch, who manages about $3 billion at Schroder Investment Management Ltd. in London. ``Buffett clearly has done another very, very good deal. EDF is in a good cash position.''

The Dow Jones Stoxx 600 Index lost 0.2 percent to 266.80 as of 2:39 p.m. in London. The measure has erased more than half of a record 8.3 percent rally on Sept. 19, when the U.S. government announced plans to bail out financial companies. The gauge is down 27 percent this year after losses and writedowns at financial companies topped $521 billion globally, sapping investor confidence as profits were wiped out.

National benchmark indexes decreased in 13 of the 18 western European benchmarks. The U.K.'s FTSE 100 Index slipped 0.3 percent as Vedanta Resources Plc dropped. France's CAC 40 Index fell 0.2 percent, while Germany's DAX declined 0.2 percent.

Ifo Index

A report today showed German business confidence slid to the lowest level in more than three years in September. The Ifo institute's business climate index, based on a survey of 7,000 executives, fell to 92.9 from 94.8 in August.

Renault, France's second-largest carmaker, declined 2.9 percent to 47.68 euros. Daimler AG, the world's biggest luxury carmaker, slipped 1.1 percent to 38.305 euros.

Oil climbed as much as 2.7 percent to $109.50 a barrel in New York on expectations a government report will show U.S. crude and fuel inventories declined last week and following the shutdown of an oil terminal in Texas.

UBS, the European bank hardest hit by the subprime crisis, added 5.1 percent to 20.12 Swiss francs. RBS increased 4.8 percent to 213 pence.

Goldman is down 40 percent this year and has lost 17 percent since the beginning of last week as Lehman Brothers Holdings Inc. filed for bankruptcy and American International Group Inc. government agreed an $85 billion credit line for the largest U.S. insurer.

Stock Offering

Berkshire also gets warrants to buy $5 billion of Goldman's common stock at $115 a share at any time in the next five years.

Goldman plans to raise $5 billion in a stock offering, double what the bank had originally sought, two people familiar with the situation said today. Goldman spokesman Lucas van Praag declined to comment.

British Energy advanced 6.2 percent to 769 pence. EDF said it will pay 774 pence a share for the utility. That's 35 percent above the stock's closing price on March 14, the last trading session before British Energy said it may receive an offer. EDF climbed 4.4 percent to 51.37 euros.

Mergers and acquisitions have totaled $471.5 billion in the past three months, compared with $524.5 billion in the year- earlier period, according to Bloomberg data, as a 12 percent drop in the MSCI World Index has slowed the pace of deals.

ProSiebenSat.1 Media AG sank 8.5 percent to 5.06 euros after Germany's biggest private broadcaster cut a profit forecast for 2008, citing falling advertising revenue.

Vedanta, India's largest copper producer, slid 5.8 percent to 1,439 pence as shareholders forced the company to dump reorganization plans unveiled two weeks ago.

Arcandor AG, Germany's biggest department-store owner, climbed 9.3 percent to 3.66 euros as banks extended the retailer's loan agreement following more than a week of negotiations.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net