By Adam Haigh - Oct 28, 2011 6:38 PM GMT+0700
European stocks dropped from a 12- week high as investors waited to discover how the euro area plans to fund its enlarged bailout facility. Asian shares increased, while U.S. index futures slid.
Petroleum Geo-Services ASA (PGS) fell 10 percent, leading a slide among oil and gas companies, after reporting a wider-than- estimated loss. Wacker Chemie AG (WCH) slipped 7.9 percent as the German chemicals company reported third-quarter earnings and sales that trailed analysts’ estimates.
The Stoxx Europe 600 Index fell 0.3 percent to 248.57 at 12:35 p.m. in London. 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 is headed for a weekly gain of 4 percent, its biggest rally this month.
“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.
Futures contracts on the Standard & Poor’s 500 Index expiring in December slid 0.6 percent and the MSCI Asia Pacific Index advanced 1.3 percent.
European Stock Valuations
The Stoxx 600 has fallen 9.9 percent this year amid concern that the euro area’s sovereign debt crisis will hamper growth. The gauge is trading 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. Almost half of the 139 companies in the Stoxx 600 that have released earnings since Oct. 11 beat analysts’ profit estimates, according to data compiled by Bloomberg.
In the U.S., reports today will probably show increases in income and spending as well as an upward revision to consumer confidence, Bloomberg surveys of economists indicate.
Petroleum Geo-Services fell 10 percent to 63.90 kroner, the biggest slide on the Stoxx 600, after reporting third-quarter net income of $13.4 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 7.9 percent to 77.62 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 11 percent to 12.65 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.
Renault, Electrolux Rally
Renault SA (RNO), France’s second-biggest carmaker, jumped 2.5 percent to 31.06 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 SA rallied 3.2 percent to 122.30 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.
Linde AG (LIN), the world’s second-biggest maker of industrial gases, climbed 2.2 percent to 118.55 euros after reporting third-quarter earnings that beat analysts’ estimates, helped by cost savings and higher demand from emerging markets.
SSAB AB (SSABA) surged 5.8 percent to 66.50 kronor after posting third-quarter net income and sales that topped estimates.
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
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