European Stocks Decline; Logitech, Invensys, BNP Paribas Drop

By Adam Haigh

Jan. 20 (Bloomberg) -- European stocks declined for a second day, led by technology companies and banks, on concern earnings will deteriorate as the economic slump deepens.

Logitech International SA sank 10 percent after reporting profit and sales that missed analysts’ estimates. Invensys Plc slid 4.7 percent as the company predicted second-half earnings will stagnate. BNP Paribas SA and Lloyds Banking Group Plc retreated more than 9 percent as Societe Generale SA and Merrill Lynch & Co. analysts cited concerns over the banks’ capital.

The Dow Jones Stoxx 600 Index lost 1.1 percent to 187.73 at 2:43 p.m. in London. The measure has declined 11 percent in the past ten days as companies from Deutsche Bank AG to Intel Corp. fueled concern the global recession will wipe out profit growth.

Earnings “are absolutely atrocious,” said Lucy MacDonald, chief investment officer of global equities at RCM UK Ltd., which has about $100 billion under management. “All the evidence we have from the economic to the corporate sector is that things are deteriorating,” she told Bloomberg Television.

The Standard & Poor’s 500 Index sank 1.5 percent as State Street Corp. and Wells Fargo & Co. plunged. The MSCI Asia Pacific Index dropped 2.2 percent as Elpida Memory Inc. retreated.

National benchmark indexes fell in all 18 western European markets except Austria. Germany’s DAX declined 0.2 percent as SAP AG retreated. The U.K.’s FTSE 100 was little changed, while France’s CAC 40 Index lost 0.8 percent.

Analysts estimate profits at companies in the Stoxx 600 slumped 17 percent in 2008 and may decrease 1.4 percent this year, Bloomberg data show. Technology companies may post a 14 percent decline in 2009, according to the estimates.

Logitech, Invensys

Logitech tumbled 10 percent to 13.13 Swiss francs after the world’s biggest maker of computer mice reported a 70 percent slide in third-quarter profit.

Invensys sank 4.7 percent to 155.4 pence. Customers ran down inventories of appliance and machine electronics and extended plant closures, leaving third-quarter profitability “significantly” weaker at the controls division, the U.K. maker of controls that help run Whirlpool Corp. washing machines said.

SAP, the world’s biggest maker of business-management software, retreated 1.6 percent to 26.17 as Capital magazine reported the company will decline to give a 2009 sales forecast at its earnings press conference next week.

Elpida, Japan’s largest computer-memory chipmaker, decreased 5 percent to 533 yen after postponing its earnings announcement.

Earnings Outlook

BNP Paribas sank 9.6 percent to 24.715 euros. Analysts at Societe Generale said France’s largest bank may need to raise as much as 8 billion euros ($10.4 billion) as they lowered the recommendation on the shares to “sell.”

Analysts forecast earnings at financial companies in the Stoxx 600 will rise 42 percent in 2009 following a 59 percent slide last year, according to Bloomberg data. The benchmark index posted its worst annual slump on record in 2008 as more than $1 trillion in credit losses and writedowns eroded profits.

Lloyds, which completed the takeover of HBOS Plc yesterday, tumbled 27 percent to 47.5 pence on concern the lender has too little capital. Lloyds spokesman Shane O’Riordain today said it has a robust capital position and business is satisfactory.

“The merger of HBOS and Lloyds TSB creates a bank which will face challenges on capital, funding and asset quality,” London-based Merrill analyst Manus Costello wrote in a note.

Allied Irish

Allied Irish Banks Plc plummeted 30 percent to 42 cents. Chief Executive Officer Eugene Sheehy said in a message to employees that he believes the Dublin-based bank will remain independent. Ireland’s government last month said it would invest 2 billion euros in Allied Irish and Bank of Ireland Plc, the country’s biggest lenders.

Credit Suisse Group AG, Switzerland’s second-largest bank, slipped 6 percent to 23.7 francs.

Air France-KLM Group declined 7.4 percent to 7.974 euros after Europe’s biggest airline said it had a third-quarter loss because of lower premium-passenger traffic and a “strong decline” in cargo sales.

Burberry Group Plc rallied 12 percent to 230 pence. Britain’s biggest publicly traded luxury company said sales growth unexpectedly picked up and announced plans to cut jobs and spending.

Metro AG advanced 6.6 percent to 26.01 euros after Germany’s largest retailer said it will cut 15,000 jobs as part of a plan to increase profit by 1.5 billion euros over four years.

IG Group Holdings Plc climbed 9.5 percent to 243.25 pence. The owner of the IG Index financial-market betting brand said first-half sales gained 47 percent to 126.5 million pounds and trading in the second half remains “strong.”

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