European Stocks Erase Losses as British Land Gains; Nokia Shares Retreat

By Sarah Jones - Nov 22, 2011 9:45 PM GMT+0700

European stocks erased losses as British Land Co. led a rally in real-estate companies, offsetting rising borrowing costs in the euro area.

Dexia SA led banks (SX7P) lower, slumping 8.9 percent, as Belgium’s bond yields rose to their highest level since 2008. Commerzbank AG slumped 10 percent on a report the lender may need more capital. Nokia Oyj (NOK1V) dropped 6.3 percent amid concern that the company has shipped fewer smartphones than estimated.

The benchmark Stoxx Europe 600 Index added 0.1 percent to 224.87 at 2:43 p.m. in London as banks and technology companies retreated. The gauge earlier dropped as much as 0.6 percent and advanced as much as 1 percent after Standard & Poor’s and Moody’s Investors Service reaffirmed America’s credit grades.

“The environment is very much presented as a black and white one, but actually it’s more complicated,” said Lucy MacDonald, chief investment officer for global equities at RCM UK Ltd. on Bloomberg Television. “That is the problem and that is what is causing volatility. There are numerous scenarios that could ensue.”

The Stoxx 600 slumped yesterday amid signs U.S. lawmakers would fail to reach an agreement on budget cuts, increasing the likelihood that the U.S. economy will face another credit downgrade. Banks sank as dollar funding costs and euro-area bond yields surged.

Spain’s three-month borrowing costs more than doubled at auction today, sending two-year yields toward the highest level since 2003, while Belgium’s 10-year bond yields rose to more than 5 percent, adding to concern the euro crisis is spreading.

U.S. Growth Revision

Stocks extended their selloff after a report showed that U.S. gross domestic product climbed at a 2 percent annual rate from July through September, down from a previous estimate of 2.5 percent, revised Commerce Department figures showed today in Washington. The median forecast of 81 economists surveyed by Bloomberg News called for no revision.

National benchmark indexes advanced in 9 of the 18 markets in western Europe. France’s CAC 40 Index gained 0.3 percent, Germany’s DAX Index lost 0.1 percent and the U.K.’s FTSE 100 Index added 0.5 percent.

Germany earlier today rejected calls from allies and investors to do more to counter market turmoil. Michael Meister, finance spokesman for Chancellor Angela Merkel’s Christian Democratic bloc said there is no “new bazooka to pull out of the bag.”

“We see no alternative to the policy we follow,” he said in a telephone interview. “We need to tell markets this very clearly.”

Dexia, UniCredit Slide

Dexia led a selloff in banks, tumbling 8.9 percent to 23.7 euro cents in Brussels. UniCredit SpA fell 2.1 percent to 71.6 euro cents in Milan, while BNP Paribas SA lost 3.7 percent to 25.87 euros in Paris.

Commerzbank dropped 10 percent to 1.22 euros after Reuters reported that Germany’s second-biggest lender may need about about 5 billion euros ($6.8 billion) in additional capital if the European (SXXP) Banking Authority toughens its requirements for lenders. The newswire cited unidentified people familiar with the bank’s own estimates.

Danske Bank A/S (DANSKE) still advanced, rising 2.4 percent to 75.70 kroner after Cevian Capital AB, a Swedish investment company, bought a 5.02 percent stake in Denmark’s largest lender on behalf of itself and Carl Icahn.

Nokia dropped 6.3 percent to 4.30 euros as Pacific Crest Securities Ltd. said in a report that the Finnish phone maker shipped fewer devices running Windows Phone 7 than predicted, while sales for the company’s Lumia product were “disappointing.”

Jefferies Group Inc. said in a note to clients that it has turned “incrementally cautious on Nokia,” due to signs that the company’s order book has slowed into the fourth quarter.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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