By Adria Cimino
Dec. 18 (Bloomberg) -- European stocks fell as Carrefour SA cut its forecast and Assicurazioni Generali SpA scrapped its profit target, overshadowing speculation President-elect Barack Obama will seek approval for an $850 billion stimulus plan.
Carrefour tumbled 7.3 percent as the retailer reduced its profit and revenue projections for a second time this year. Generali slid 2.3 percent after saying its 2009 targets are no longer valid. Sanofi-Aventis SA and Unilever, which make at least 30 percent of their sales in the Americas, advanced more than 1 percent.
The Dow Jones Stoxx 600 Index slipped 0.3 percent to 196.83 at 2:46 p.m. in London, even as more than half of its stocks rose. The measure is down 46 percent this year as credit losses and writedowns at the world’s largest banks surpassed $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.
“The economy hasn’t stopped showing signs of contraction,” Benoit de Broissia, who helps manage about $5.8 billion at KBL Richelieu in Paris, said in a Bloomberg Television interview. “Stocks will remain volatile. The market remains febrile.”
The Stoxx 600 is headed for a record 46 percent annual drop as credit losses and writedowns at the world’s biggest banks surpassed $1 trillion and Europe, the U.S. and Japan entered the first simultaneous recessions since World War II.
Obama may ask Congress next year to approve a stimulus plan of around $850 billion, an amount that has grown as the U.S. economy sinks deeper into recession, an adviser to the president-elect said. Obama’s transition team believes that the amount is necessary to reverse rising unemployment, said the adviser, who spoke on condition of anonymity.
Business Confidence
German business confidence fell to the lowest in more than a quarter century in December as the credit crisis pushes Europe’s largest economy deeper into a recession, figures from the Ifo institute showed today.
National benchmarks rose in half of the 18 western European markets. The U.K.’s FTSE 100 fell 0.2 percent. Germany’s DAX advanced 1.1 percent. France’s CAC 40 lost 0.6 percent.
The S&P 500 retreated from a five-week high yesterday in the U.S. on concern the Federal Reserve has few tools left to combat the recession after reducing its benchmark interest rate to a record low.
Treasury Secretary Henry Paulson may ask Congress for the second half of the $700 billion bank rescue program, concerned that the deepening recession may spark further financial turmoil.
ECB Meeting
A report today showed the number of Americans filing first- time claims for unemployment benefits held near a 26-year high, signaling the labor market is deteriorating as the economy heads into a second year of a recession.
The European Central Bank may cut its deposit rate as soon as today in an effort to jolt banks into lending more to each other, economists said.
President Jean-Claude Trichet and his governing council meet in Frankfurt after signaling this month they may soon lower the 2 percent rate they pay on cash stashed overnight at the bank by financial companies. They want to encourage banks to lend more and free up capital for consumers and companies.
Carrefour sank 7.3 percent to 27.16 euros. Merrill Lynch & Co. lowered its recommendation to “underperform” and Deutsche Bank AG downgraded the shares to “hold” from “buy” after the retailer reduced its full-year sales and profit forecasts.
Generali Targets
Generali retreated 2.3 percent to 19.16 euros. Italy’s biggest insurer said its 2009 targets are no longer valid and weak financial markets are hurting profit this year.
The 2009 objectives were “formulated in a completely different context,” the Trieste, Italy-based company said in a statement. Generali will wait for markets to stabilize before setting new targets, the company said.
Profits at Stoxx 600 companies are expected to drop 15 percent this year, compared with 11 percent growth forecast at the beginning of 2008, estimates compiled by Bloomberg show.
Sanofi gained 1.7 percent to 46.38 euros. France’s largest drugmaker made almost 34 percent of sales in the U.S. last year, according to Bloomberg data. Unilever climbed 3 percent to 1,550 pence. The world’s second-biggest consumer-products company gets about a third of its revenue in the Americas.
Arriva Plc jumped 4 percent to 569 pence after the operator of the U.K.’s longest train route said group revenue will increase about 50 percent for the full year and there will be “significant” earnings growth.
Oil Stocks
Oil and gas companies were the worst performers among 19 industries in the Stoxx 600 today, losing 2.6 percent as a group, followed by banks and basic-resources companies.
Total SA, Europe’s third-biggest oil company, fell 2.8 percent to 40.32 euros as crude traded near a four-year low. Galp Energia SGPS SA, Portugal’s largest oil and gas company, tumbled 4 percent to 7.41 euros.
BHP Billiton Ltd., the world’s largest mining company, slid 2.3 percent to 1,268 pence as copper, lead, nickel and tin fell in London. Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, retreated 4.4 percent to 427.25 pence.
BNP Paribas SA, France’s largest bank, dropped 4.4 percent to 32.71 euros. Deutsche Bank AG cut its recommendation on the shares to “hold” from “buy.”
Societe Generale SA, the country’s third-biggest lender, lost 5.2 percent to 32.99 euros. Royal Bank of Scotland Group Plc cut its share-price estimate by 46 percent to 37 euros, citing exposure to “further significant markdowns.”
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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