European Stocks Retreat From 12-Week High as Investors Seek Detail on Debt

By Adam Haigh - Oct 28, 2011 11:02 PM GMT+0700

European stocks declined from a 12- week high as investors waited to discover how the euro area plans to fund its enlarged bailout facility.

Petroleum Geo-Services ASA (PGS) fell 14 percent, leading a slide among oil and gas companies, after reporting profit that missed analysts’ estimates. Wacker Chemie AG (WCH) slumped 9.8 percent as the German chemicals company reported third-quarter sales that trailed analysts’ estimates. Renault SA (RNO), France’s second-biggest carmaker, gained 4.5 percent as third-quarter sales topped analysts’ estimates.

The Stoxx Europe 600 Index retreated 0.2 percent to 249 at the close. The gauge surged 3.6 percent yesterday after the region’s leaders said they will boost their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a bid to stem the debt crisis. The Stoxx 600 has gained 4.2 percent this week, its fifth weekly gain.

“The situation is not resolved,” said Monika Rosen, the head of global research at UniCredit SpA in Vienna. There is a need for “political consensus between all these euro nations. That is the difficulty we are trying to solve. It’s a consensus- building process that makes it slow and unclear. Markets are still skeptical.” She spoke in a Bloomberg Radio interview with Ken Prewitt.

National benchmark indexes declined in 13 of the 17 western-European markets that were open today. The U.K.’s FTSE 100 Index slipped 0.2 percent and France’s CAC 40 Index retreated 0.6 percent. Germany’s DAX Index gained 0.1 percent.

European Stock Valuations

The Stoxx 600 has fallen 9.7 percent this year amid concern that the euro area’s sovereign debt crisis will hamper growth. The gauge traded at 10.8 times the estimated earnings of its companies, compared with the average multiple of 12 during the past five years, according to data compiled by Bloomberg. Half of the 140 companies in the Stoxx 600 that have released earnings since Oct. 11 beat analysts’ profit estimates, according to data compiled by Bloomberg.

Petroleum Geo-Services fell 14 percent to 61.25 kroner, the biggest slide on the Stoxx 600, after reporting third-quarter net income of $13.5 million, compared with a loss of $40.4 million a year earlier. That missed the $32.6 million average of analysts’ estimates compiled by Bloomberg.

Wacker Chemie sank 9.8 percent to 76 euros. The Munich- based chemicals company reported third-quarter sales that trailed analysts’ estimates and forecast lower revenue in the fourth quarter.

YIT Oyj (YTY1V), Finland’s biggest builder, plunged 12 percent to 12.45 euros after posting third-quarter net income of 18.6 million euros. That missed the 38.1 million-euro mean estimate of eight analysts surveyed by Bloomberg.

U.S. Consumer Confidence

In the U.S., a report showed that consumer confidence unexpectedly rose in October from September. The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 60.9 from 59.4 the previous month. The gauge was projected to drop to 58, according to the median forecast of 66 economists surveyed by Bloomberg News. The preliminary reading for the month was 57.5.

Renault jumped 4.5 percent to 31.67 euros. The carmaker said revenue increased to 9.75 billion euros from 8.71 billion euros a year earlier. That beat the 9.63 billion-euro average of four analyst estimates compiled by Bloomberg. Societe Generale SA upgraded its stance on the shares to “buy” from “hold.”

Electrolux AB (ELUXB) rallied 6.8 percent to 126.50 kronor. The Swedish maker of household appliances said third-quarter net income fell to 826 million kronor ($130 million) from 1.38 billion kronor a year earlier. Sales dropped to 25.65 billion kronor from 26.33 billion kronor. Both profit and sales exceeded analysts’ estimates in a Bloomberg survey.

SSAB AB (SSABA) surged 7.4 percent to 67.50 kronor after posting third-quarter net income and sales that topped estimates. The stock has rallied 28 percent this week, its largest advance since 1992.

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

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net