European Stocks Swing Between Gains, Losses; Carmakers Drop, Miners Climb

By Corinne Gretler - Dec 16, 2011 10:19 PM GMT+0700

European stocks swung between gains and losses as Standard & Poor’s said the region’s economies may see a larger contraction in 2012, offsetting a report that showed U.S. inflation remains in check.

PSA Peugeot Citroen and Fiat SpA led a gauge of European (SXXP) carmakers lower. Man Group Plc (EMG), the world’s largest hedge fund, fell 3 percent after Deutsche Bank AG recommended selling the stock. Kazakhmys Plc (KAZ) and Antofagasta Plc (ANTO) led mining shares higher, both jumping at least 3 percent.

The benchmark Stoxx Europe 600 Index gained 0.1 percent to 235.01 at 3:18 p.m. in London. The gauge is still headed for a weekly loss of 2.3 percent on concern euro-area policy makers are struggling to contain the region’s debt crisis.

The cost of living in the U.S. stagnated in November as gasoline prices dropped, supporting the Federal Reserve’s view that inflation remains in check.

“The core rates have climbed, but they’re still in a range in which the American central bank doesn’t see a need for immediate action,” Viola Stork, an analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in an e-mail.

The unchanged reading in the consumer-price index last month followed a 0.1 percent decline the prior month, a report from the Labor Department showed today in Washington. That compares with a 0.1 percent increase forecast in a Bloomberg News survey of 82 economists. So-called core prices, which exclude food and energy costs, rose 0.2 percent, more than forecast, reflecting higher medical care and clothing costs.

Chance of Recession

Stocks erased gains after the S&P said the Netherlands, Germany, Belgium, Austria and Finland may see their gross domestic products suffering larger contraction next year. The austerity measures adopted across the euro region will imply that there won’t be any fiscal support for growth, it said.

In Italy, Prime Minister Mario Monti’s government won a confidence vote in Parliament on a 30 billion-euro ($39 billion) emergency budget plan aimed at spurring growth and cutting the euro-area’s second-biggest debt. A final vote will be held in the lower house at 7:30 p.m., and then the package will pass to the Senate, which will decide on it on Dec. 23.

National benchmark indexes fell in 8 of the 18 western- European markets. France’s CAC 40 lost 0.4 percent, Germany’s DAX was little changed and the U.K. FTSE 100 advanced 0.5 percent.

Carmakers Decline

Peugeot dropped 0.9 percent to 11.91 euros and Fiat SpA (F) declined 1.8 percent to 3.46 euros, after the two companies led the biggest decline in European car sales in five months. Michelin & Cie., the world’s second-largest tire maker, lost 3.1 percent to 42.85 euros. Faurecia (EO) SA, Europe’s biggest maker of car interiors, retreated 2.5 percent to 13.14 euros.

Registrations in November fell 3 percent to 1.07 million vehicles from 1.10 million a year earlier, the biggest decline since June, the Brussels-based European Automobile Manufacturers Association, or ACEA, said today.

Man Group slid 3 percent to 129.5 pence after Deutsche Bank cut the stock to “sell” from “buy.”

Essar Energy Plc (ESSR) slumped 5 percent to 184 pence, its lowest price since its listing in May 2010. Etablissements Maurel & Prom SA retreated 3.5 percent to 11.29 euros. Credit Suisse Group AG analysts led by Edward Westlake cut their price estimates for European integrated oil companies, citing “challenging” downstream business environment.

SAP, Commodity Shares

SAP AG (SAP) lost 1.7 percent to 42.60 euros. The Financial Times Deutschland reported that the software maker doesn’t plan any major acquisitions after the takeover of SuccessFactors Inc., which was the company’s “big purchase.” The newspaper cited Bill McDermott, SAP’s co-chief executive officer.

Xstrata Plc (XTA) gained 3.2 percent to 978.5 pence and Kazakhmys added 3.8 percent to 879 pence as copper and other base metals rose on the London Metal Exchange. Antofagasta jumped 3.4 percent to 1,168 pence. Rio Tinto Group Plc, the world’s second- biggest mining company, climbed 2.5 percent to 3,104.5 pence.

Klepierre (LI) SA, Europe’s second-largest shopping-center owner, increased 6.2 percent to 20.69 euros after Chief Executive Officer Laurent Morel said he expects a “good Christmas” for his company, and this may make up for a second half of 2011 that hasn’t been as strong as the first half.

Lanxess AG (LXS), the German chemical maker spun off from Bayer AG in 2005, rose 2.8 percent to 37.32 euros after Morgan Stanley raised the shares to “overweight” from “equal weight.”

Petroleum Geo-Services ASA (PGS), the world’s third-biggest surveyor of oil and gas fields, rallied 7.5 percent to 58.75 kroner after it predicted earnings before interest, taxes, depreciation and amortization will rise to the range of $650 million to $700 million in 2012.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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