By Adria Cimino
Jan. 7 (Bloomberg) -- European and Asian stocks fell from the highest levels in more than 15 months after China, the driver of the global recovery, took steps to curb lending growth. U.S. index futures dropped.
Tate & Lyle Plc slid 5.7 percent after Credit Suisse Group AG downgraded the maker of the low-calorie sweetener Splenda. Lagardere SCA slipped 2.4 percent after Goldman Sachs Group Inc. recommended selling shares of France’s largest publisher. Continental AG, Europe’s second-biggest auto-parts maker, surged 7.6 percent after announcing a 1.1 billion-euro ($1.6 billion) share sale to help refinance debt.
Europe’s Dow Jones Stoxx 600 Index fell 0.4 percent to 256.83 at 8:22 a.m. in London, retreating from the highest close since October 2008. The measure jumped 28 percent last year, its biggest gain since 1999, boosted by record-low interest rates in Europe and the U.S. and about $12 trillion of commitments from governments worldwide to revive credit markets and boost growth.
The benchmark index for European shares is trading at about 59 times earnings, the highest level since 2003, according to data compiled by Bloomberg. The gauge has surged 63 percent since a 12-year low on March 9.
The MSCI Asia Pacific Index retreated 0.4 percent from a 16-month high today as the Shanghai Composite Index fell 1.9 percent, the most in two weeks. China’s central bank sold three- month bills at a higher interest rate for the first time in 19 weeks after saying its focus for 2010 is controlling the record expansion in lending and curbing price increases.
Fed Stimulus
U.S. stocks rose yesterday as higher energy and metal prices lifted commodity producers and some Federal Reserve policy makers said they would consider more stimulus measures, overshadowing declines in technology and telephone shares. Standard & Poor’s 500 Index futures lost 0.2 percent today.
Fed officials discussed whether the economy is strong enough to allow their $1.73 trillion of asset purchases to end in March and differed over the risk of inflation, according to minutes of their last meeting released yesterday.
A few policy makers said it “might become desirable at some point” to boost or extend securities purchases aimed at lowering mortgage rates, while one person sought a reduction, according to minutes of the Dec. 15-16 meeting of the Federal Open Market Committee. On inflation, some officials said slack in the economy will damp prices, and others saw risks from the central bank’s “extraordinary” stimulus.
“Whilst the general lack of fresh fundamental data could be weighing to an extent, arguably the rally should still have legs even if the Fed has come out with a rather bleak assessment of U.S. economic recovery,” Ben Potter, a research analyst at IG Markets in Melbourne, wrote in a note.
Tate, Lagardere
Tate & Lyle retreated 5.7 percent to 421.9 pence, the biggest intraday drop since July. Credit Suisse cut the shares to “neutral” from “outperform.”
Lagardere slid 2.4 percent to 28.05 euros after being downgraded to “sell” from “neutral” at Goldman Sachs and added to the firm’s “conviction sell” list.
Continental jumped 7.6 percent to 43.88 euros. A group of banks led by Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. agreed to underwrite the sale of 31 million new shares at 35 euros each, Continental said. The price is 14 percent less than the stock’s last closing price in Frankfurt.
Wolseley Plc gained 2.6 percent to 1,396 pence. The world’s biggest supplier of heating and plumbing gear was raised to “buy” from “neutral” at UBS AG, which cited possible “positive share price momentum” before the company’s strategic review in March.
J Sainsbury Plc added 1.5 percent to 322.6 pence. The U.K.’s third-biggest supermarket owner said third-quarter like- for-like sales excluding VAT and fuel rose 4.2 percent. Analysts had forecast a 3.5 percent increase, according to estimates compiled by Bloomberg.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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