By Corinne Gretler - Feb 7, 2012 9:11 PM GMT+0700
Feb. 7 (Bloomberg) -- Scilla Huang Sun, head of equities at Swiss & Global Asset Management, talks about the outlook for luxury-brand stocks and recommendation of LVMH Moet Hennessy Louis Vuitton SA, Swatch Group AG and Cie. Financiere Richemont SA. She speaks with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)
Feb. 7 (Bloomberg) -- Adrian van Tiggelen, senior equity strategist at ING Investment Management, talks about the outlook for European stocks, investment strategy and corporate earnings. He speaks from The Hague with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
European stocks declined for a second straight day as Greek talks on measures needed to get a second bailout continued and China said industrial-output growth is likely to slow.
Bayerische Motoren Werke AG (BMW) and Rio Tinto Group led carmakers and mining companies lower. LVMH Moet Hennessy Louis Vuitton SA (MC) lost 3.5 percent after three Bulgari directors sold a 558 million-euro ($733 million) stake. Swatch Group AG (UHR), the world’s biggest watchmaker, sank 4.9 percent as profit trailed projections. ArcelorMittal and Yara International ASA (YAR) rose more than 1.5 percent after reporting earnings.
The Stoxx Europe 600 Index declined 0.6 percent to 262.57 at 2:09 p.m. in London. The gauge has still advanced 7.4 percent this year amid optimism that the euro area will contain its sovereign-debt crisis and that the economic recovery in the U.S. remains intact.
“The Greek tragedy dominates the headlines,” Viola Stork, an analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in a report today. “Unsuccessful consultations between the local government and the parties on the necessary austerity measures cause increasing fear of a default.”
Greek Talks
Greek Prime Minister Lucas Papademos is convening the nation’s political leaders to seek consensus on the cuts required for another European Union-led bailout. Officials are working on the final draft of the document listing the budget and structural measures required to receive international funding, a government official said.
They have already agreed to make further cuts this year equal to 1.5 percent of gross domestic product, but have yet to decide how to recapitalize banks, ensure the viability of pension funds and reduce wages to increase the economy’s competitiveness.
China’s industrial output growth will probably slow this quarter as the world economy cools and the euro area’s crisis worsens, the Ministry of Industry and Information Technology said today.
“The global economy is slowing down, Europe’s sovereign- debt crisis is deepening and the downside risks to the world economy are rising with international demand still slack and global commodities and financial markets continuing to be volatile,” the ministry said.
German industrial output unexpectedly dropped the most in three years in December as Europe’s debt crisis weighed on confidence and the global economic slowdown damped demand. Production fell 2.9 percent from November, when it stagnated, the Economy Ministry in Berlin said today. Economists had expected output to remain unchanged, according to the median of 41 forecasts in a Bloomberg News survey.
Automakers Fall
BMW, the world’s biggest maker of luxury cars, slid 2.3 percent to 69.13 euros, snapping a five-day advance, and Renault SA (RNO) retreated 2.7 percent to 36.09 euros. Automakers were the among worst performing groups of 19 industries in the Stoxx 600 today.
Rio Tinto, the world’s third-largest mining company, fell 1.9 percent to 3,869.5 pence and Eurasian Natural Resources Corp. dropped 3.1 percent to 699.5 pence.
LVMH retreated 3.5 percent to 124.15 euros after Paolo Bulgari, Nicola Bulgari and Francesco Trapani sold 4.48 million shares in the world’s largest maker of luxury goods at 124.50 euros apiece.
Swatch declined 4.9 percent to 394.40 Swiss francs after reporting 2011 operating profit of 1.61 billion francs ($1.75 billion), missing the average projection in a Bloomberg survey of 1.67 billion francs. Cie. Financiere Richemont SA, the owner of the Cartier brand, fell 2.9 percent to 53.70 francs.
Burberry, Dior
Luxury shares fell. Burberry Group Plc (BRBY) lost 2.6 percent to 1,408 pence and Christian Dior SA (CDI) slid 3.9 percent to 110 euros. Hermes International (RMS) SCA, the French maker of Birkin bags and silk scarves, dropped 3.2 percent to 267.90 euros.
Xstrata Plc (XTA), the largest exporter of power-station coal, retreated 3.4 percent to 1,219 pence. Glencore International Plc slipped 2.6 percent to 448.9 pence after it agreed to buy the company for 39.1 billion pounds ($62 billion) in the biggest mining takeover.
Standard Life Investments Ltd. said it plans to vote against the proposed merger, as it “clearly undervalues Xstrata’s assets and future earnings contribution,” according to David Cumming, head of equities at Standard Life.
Xstrata reported 2011 earnings before interest, taxes, depreciation and amortization of $11.6 billion, up from $10.4 billion a year earlier. That trailed the $11.5 billion median estimate of analysts surveyed by Bloomberg.
Lagardere Falls
Lagardere SCA (MMB) sank 5.6 percent to 21.86 euros, the largest decline in three months. The publisher said it will record losses of about 900 million euros to reflect the lower value of its sports-marketing and pay-television units.
ArcelorMittal (MT), the world’s biggest steelmaker, gained 2.6 percent to 16.58 euros after reporting fourth-quarter Earnings before interest, taxes, depreciation and amortization of $1.71 billion, beating the average analyst estimate of $1.68 billion. The company also forecast that first-half earnings will exceed the previous six months.
Yara International rose 1.8 percent to 262.10 kroner. The largest maker of nitrogen fertilizers posted fourth-quarter net income of 3.39 billion kroner ($584 million), topping the average analyst estimate of 2.98 billion kroner.
Novo Nordisk A/S, the world’s biggest insulin maker, increased 2.3 percent to 753 kroner, its highest price since at least 1991, and Shire Plc (SHP) jumped 3.6 percent to 2,206 pence. Keyur Parekh, an analyst at Goldman Sachs Group Inc., said the two companies are among the best positioned stocks in pharmaceuticals.
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
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