European Stocks Erase Gains as U.S. Durable Goods Orders Slump in January

By Tom Stoukas - Feb 28, 2012 8:41 PM GMT+0700

Play Video

Feb. 28 (Bloomberg) -- Peter Dixon, global equities economist at Commerzbank AG, talks about the European Central Bank's longer-term refinancing operation and the outlook for Germany. He speaks with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)

European (SXXP) stocks erased their gains, leaving the benchmark Stoxx Europe 600 Index little changed, after a report showed U.S. durable goods orders fell in January by the most in three years.

The Stoxx 600 fell less than 0.1 percent to 263.74 at 1:38 p.m. in London, after earlier gaining as much as 0.4 percent. The gauge has rallied 7.9 percent so far this year as the European Central Bank lent unlimited cash to the region’s banks. Standard & Poor’s 500 Index (SPH2) futures advanced 0.1 percent, while the MSCI Asia Pacific Index increased 0.8 percent.

In the U.S., bookings for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast in a Bloomberg News survey.

The ECB will allocate cash from its long-term refinancing operation tomorrow. It will probably provide 470 billion euros ($632 billion) of three-year cash, according to a Bloomberg News survey of analysts.

Germany’s Chancellor, Angela Merkel, won a parliamentary vote on Greek aid after the close of European (SXXP) trading yesterday. She warned lawmakers that pushing Greece out of the euro risked “incalculable” damage.

“The German vote I don’t think was a great surprise, although the degree of support it had was marginally positive,” said Guy Foster, an analyst at Brewin Dolphin Securities Ltd. in London.

Vote on Bailout

In a vote that showed dissent in her coalition has grown, 496 members of the lower house, or Bundestag, voted in favor of the 130 billion-euro package. Ninety voted against and five abstained. Merkel’s government pushed through the measure to prevent Greece’s economy from collapsing.

Greece’s credit ratings were cut to “selective default” by S&P after the Mediterranean nation negotiated the biggest sovereign-debt restructuring in history. S&P lowered Greece’s rating from CC, two levels above default, after the government added clauses to its debt designed to include investors unwilling to take part in the exchange, the New York-based company said in a statement yesterday.

An index of executive and consumer sentiment in the 17- nation euro area rose for a second month, increasing to 94.4 from 93.4 in January, the European Commission in Brussels said today. Economists had forecast a gain to 94, the median of 31 estimates in a Bloomberg News survey showed.

German business confidence rose more than economists forecast to a seven-month high in February and investors became more optimistic. German consumer confidence will increase to a 12-month high in March, helped by declining unemployment, GfK SE said today.

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