European Stocks Are Little Changed as Banco Comercial, UniCredit Advance

By Julie Cruz - Dec 27, 2011 7:59 PM GMT+0700

European stocks were little changed before reports that may show house prices in U.S. cities fell at a slower pace and consumer confidence climbed. Asian shares and U.S. index futures declined.

Banco Comercial Portugues SA and Banco Espirito Santo SA (BES) rallied more than 6 percent as Jornal de Negocios said Portugal may recapitalize its banks without taking an equity stake. Chemical makers also advanced. Italian lenders UniCredit SpA (UCG) and Mediobanca SpA retreated more than 2.5 percent.

The benchmark Stoxx Europe 600 Index dropped less than 0.1 percent to 241.82 at 12:58 p.m. in London. The MSCI Asia Pacific Index declined 0.2 percent as the Bank of Japan warned of risks to the economy and South Korean consumer confidence slid. Futures on the Standard & Poor’s 500 Index expiring in March also slipped 0.2 percent.

“After the Christmas holidays, market participants are focused on the consumer-confidence index and Case-Shiller,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “The unemployment data in the next days are more important for the market because it shows how strong the U.S. economy really is.”

The Stoxx 600 rallied 3.5 percent last week as reports showing a decline in U.S. jobless claims and increases in consumer confidence and durable-goods orders spurred optimism that the world’s biggest economy is strengthening. The gauge has still retreated 12 percent this year as Europe’ debt crisis spread from Greece to Italy and Spain.

Reduced Volume

The volume of share trading across Europe is reduced today as U.K. and Irish markets remain closed for a second day following the Christmas holiday. The number of Euro Stoxx 50 Index futures that have changed hands is less than 20 percent of the average over the past 20 days, according to data compiled by Bloomberg.

The S&P/Case-Shiller index of property values in 20 U.S. cities dropped 3.2 percent in October from the same month in 2010, the smallest year-over-year decrease since January, according to the median forecast of 20 economists surveyed by Bloomberg News. The Conference Board’s consumer-confidence gauge rose to a five-month high of 58.6 in December from 56 the previous month, separate figures may show.

The S&P/Case-Shiller index is due at 9 a.m. New York time and the confidence measure is scheduled for 10 a.m. The Labor Department will release data on initial claims for jobless benefits on Dec. 29.

Price Swings

Stock swings that reached twice the five-decade average left the S&P 500 with the smallest price change in 41 years and utilities, soapmakers and health-care providers at the highest valuations since 2008. The S&P 500 rose 3.7 percent last week, sending the measure to a gain of 0.6 percent for the year. The last time it moved less on an annual basis was in 1970, when it fell 0.1 percent.

Germany’s economy is robust enough to withstand a more difficult European and global business environment, Handelsblatt cited Economy Minister Philipp Roesler as saying in an interview. Private consumption is sustaining growth and businesses are strong enough to be optimistic about the future, the German newspaper cited Roesler as saying.

Portuguese Banks

Banco Comercial Portugues (BCP) advanced 6.8 percent to 12.5 euro cents and Banco Espirito Santo climbed 6.7 percent to 1.25 euros. Portugal may recapitalize its banks without becoming a shareholder, Jornal de Negocios reported, without saying where it got the information.

The government may subscribe contingent convertible bonds sold by the banks, the newspaper said. So-called CoCos are bonds that convert into equity if a bank’s capital drops below a set level.

Wacker Chemie AG (WCH) and Symrise AG led chemical makers higher. The German companies added 1.3 percent to 61.62 euros and 1.5 percent to 20.11 euros, respectively. Chemical shares were the best performers in Europe today, rising 0.5 percent as a group.

UniCredit and Mediobanca (MB) lost 4 percent to 6.63 euros and 2.9 percent to 4.62 euros, respectively, in Milan trading. Intesa Sanpaolo SpA tumbled 2.4 percent to 1.28 euros.

Italy plans to sell almost 450 billion euros of debt next year to pay for maturing bonds and bills and cover the government’s budget deficit, Il Sole 24-Ore said, citing an interview with Maria Cannata, director of public debt.

Sky Deutschland AG declined 2.5 percent to 1.38 euros. The company won’t show Paramount Pictures Corp.’s movies in 2012, and the change will damp enthusiasm for its movie channel, according to Financial Times Deutschland. Paramount’s films include “Mission Impossible,” “TinTin” and “Titanic.”

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

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