European Stocks Decline After Greek Bailout Agreement

By Tom Stoukas - Feb 21, 2012 8:53 PM GMT+0700

European stocks fell from a six- month high amid speculation a Greek bailout deal won’t be sufficient to solve the nation’s debt crisis.

TNT Express NV slid 2.2 percent after reporting a fourth- quarter loss. Segro Plc dropped 2.3 percent after writing down the value of peripheral assets by more than analysts expected. National Bank of Greece SA (ETE), the country’s largest lender, plunged 8.8 percent.

The Stoxx Europe 600 Index (SXXP) lost 0.5 percent to 266.71 at 1:52 p.m. in London. The gauge has still rallied 24 percent since Sept. 22 amid speculation that the European sovereign-debt crisis will be contained and as U.S. economic data exceeded forecasts. The measure rose for a fourth day yesterday, climbing to the highest level since July 26.

“Further hurdles remain,” Jonathan Sudaria, a trader at London Capital Group, wrote in e-mailed comments. “Concerns still linger over whether the incoming government in Athens would have any incentive or wish to enforce the austerity measures after they have received the bailout package.”

National benchmark indexes dropped in all of the western European markets, led by Greece’s ASE, which sank 2.3 percent. France’s CAC 40 dropped 0.5 percent and Germany’s DAX (DAX) slid 0.7 percent. The U.K.’s FTSE 100 Index declined 0.3 percent.

Debt Relief

European finance ministers approved a 130 billion-euro ($173 billion) bailout package for Greece early today by tapping into European Central Bank profits and convincing investors to provide more debt relief to the Mediterranean country. The deal includes a 53.5 percent writedown for investors in the nation’s debt, according to Luxembourg’s Jean-Claude Juncker, who chaired the talks. Finance ministers haggled into the night in Brussels over the terms of new loans and a possible contribution by central banks.

The odds that Greece will remain encumbered by debt were illustrated by an analysis by European and International Monetary Fund officials that highlighted what could go wrong with a country unable to grow out of its fiscal woes by devaluing its currency. In a worst-case scenario Greece’s debt might balloon to 160 percent of gross domestic product in 2020, it concluded.

Unless 90 percent of investors sign up to the bond swap, Greece may need to use force to secure the debt relief, entering legal difficulties. Finland and Germany are among the nations whose lawmakers must back the new loans and the International Monetary Fund must also decide how much it is willing to contribute to the package.

TNT Sinks

TNT Express fell 2.2 percent to 9.96 euros after the express-delivery service in takeover talks with United Parcel Service Inc. reported a fourth-quarter loss as reorganization costs and losses in emerging markets mounted. Post NL, which owns almost 30 percent of TNT according to data compiled by Bloomberg, also dropped 2.2 percent to 4.85 euros.

Segro (SGRO), the U.K.’s largest publicly traded owner of industrial properties, declined 2.3 percent to 231.2 pence. Net asset value adjusted for share options slid 9.8 percent to 340 pence a share in the second half of 2011, the Slough, England- based company said. The average analyst estimate was 354 pence, according to a report from JPMorgan Chase & Co.

National Bank of Greece led declines in financial shares, falling 8.9 percent to 2.7 euros, after three days of gains. Intesa Sanpaolo SpA dropped 2.3 percent to 1.53 euros in Milan. Deutsche Bank AG (DBK), Germany’s largest lender, fell 2 percent to 33.89 euros. Royal Bank of Scotland Group Plc slid 1.7 percent to 28.01 pence.

Wienerberger AG (WIE) fell 2.2 percent to 9.28 euros in Vienna after the world’s biggest brickmaker’s 2011 net income missed analyst estimates.

Tullow, Colruyt

Tullow Oil Plc (TLW) dropped 4 percent to 1,537 pence, the largest decline in a month, after announcing results for an exploration well in Sierra Leone.

“While the pay encountered liquids, further appraisal is required to assess the commerciality,” Goodbody Stockbrokers said.

Colruyt SA (COLR), Belgium’s biggest discount food retailer, sank 3.3 percent to 28.79 euros after it was cut to “conviction sell” from “neutral” at Goldman Sachs Group Inc.

Telefonica SA (TEF), Spain’s largest phone company, fell 1.1 percent to 13.11 euros after the brokerage downgraded the shares to “sell” from “neutral.”

Petropavlovsk Plc (POG), a miner of gold in Russia, rose 4.3 percent to 726.5 pence after Nomura Holdings Inc. upgraded the stock to “neutral” from “reduce.”

Croda International Plc (CRDA) gained 3.7 percent to 2,106 pence after reporting a 26 percent jump in pretax profit last year to 242.2 million pounds ($384 million), exceeding the average 239 million pounds estimated by analysts.

Banca Monte dei Paschi di Siena SpA (BMPS), Italy’s third-biggest bank, surged 7.5 percent to 38.8 euro cents ahead of the sale of a stake by its biggest investor.

Software AG (SOW) rose 1.4 percent 28.59 after its shares were raised to “buy” from “hold” at Deutsche Bank.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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