European Stocks Fluctuate; Greek Shares Decline, Glaxo Advances
By Adam Haigh
March 18 (Bloomberg) -- European stocks fluctuated between gains and losses as concern Greece won’t get European Union aid next week and may need help from the International Monetary Fund offset a rally by health-care companies.
Greece’s ASE Index dropped the most in five weeks as a German official said Greece should turn to the IMF if it requires a bailout. HSBC Holdings Plc and UBS AG led financial shares lower as Citigroup Inc. downgraded its stance on the industry. GlaxoSmithKline Plc jumped the most in eight months after Novartis AG gave up U.S. rights to a potential rival to its best-selling drug.
The Stoxx Europe 600 Index rose less than 0.1 percent to 261.54 at 11:42 a.m. in London, having swung between gains and losses at least nine times. The benchmark gauge closed at a 17- month high yesterday after surging 65 percent since March 9 last year. The measure had retreated for the first two months of the year amid concern that Greece will struggle to rein in Europe’s biggest budget deficit.
“Our long-held fears that there will be very major sovereign problems as far as the eye can see have started to materialise,” Jim Reid, a London-based strategist at Deutsche Bank AG, wrote in a report. “In the near term we would like to keep fairly neutral on European equities.”
‘Daring Experiment’
While Greek government proposals to reduce its deficit led Standard & Poor’s to affirm the nation’s investment-grade credit rating on March 16, the shift in Germany underscored the rift in the European Union as the global economy emerges from the worst slump since World War II. Michael Meister, the chief finance spokesman for German Chancellor Angela Merkel’s party, said attempting a Greek rescue without the IMF “would be a very daring experiment.”
Greek Prime Minister George Papandreou gave European leaders until next week to spell out what financial aid they are prepared to give him and indicated he may seek help from the IMF if the EU falls short.
National Bank of Greece SA, the nation’s biggest lender, dropped 5.6 percent to 14.75 euros, dragging the ASE Index 3.2 percent lower. EFG Eurobank Ergasias, the second-largest bank, slumped 7.4 percent to 6.03 euros.
The MSCI Asia Pacific Index fell 0.4 percent. Futures on the S&P 500 Index expiring in June slipped less than 0.1 percent before reports on jobless claims and the cost of living.
Banks Retreat
Bank stocks posted the steepest decline among all industry groups in the Stoxx 600 after Citigroup cut its stance on global financial shares to “neutral” from “overweight.”
“Those investors who took a brave top-down view and moved overweight financials as they called the 2009 market surge should now be reducing exposure and moving back towards a more stock-picking approach within the sector,” according to a report by Citigroup equity strategist Robert Buckland. Profits at European financial companies are forecast to grow 65 percent in 2010 after a 351 percent jump last year, according to analyst estimates compiled by Bloomberg.
HSBC, Europe’s biggest bank, lost 1.2 percent to 684.5 pence and UBS declined 1.5 percent to 16.51 Swiss francs.
Glaxo, the U.K.’s biggest drugmaker, rallied 2.5 percent to 1,254.5 pence, leading a measure of health-care shares to the second-largest gain among 19 industry groups in the Stoxx 600. Novartis’s partner Vectura Group Plc took full control of the U.S. development and commercialization of the drug, known as VR315, a potential generic version to Glaxo’s Advair asthma treatment.
‘Successful Registration’
“Given Novartis’ decision not to pursue development in the U.S., the market will assume that the probability of a successful registration of a generic product in the U.S. has reduced,” Panmure Gordon & Co. analyst Savvas Neophytou wrote in a report.
SGL Carbon SE, the world’s largest maker of carbon and graphite products, slid 4.9 percent to 21.99 euros after reporting a 2009 loss of 60.3 million euros ($82.5 million), compared with a year-earlier profit of 190.5 million euros.
SIG Plc sank 8.2 percent to 116.9 pence after forecasting first-half pretax profit will be “well below” year-earlier levels. Europe’s biggest supplier of insulation and roofing also reported a full-year loss of 45.6 million pounds ($69.5 million) and said it will skip its final dividend.
Enel SpA slipped 1.3 percent after Italy’s largest utility halved its dividend to reduce debt. The company proposed cutting its dividend by 49 percent to 25 cents and said earnings before interest, tax, depreciation and amortization will be little changed this year and next.
Aegis, Nike
Aegis Group Plc, the world’s largest independent buyer of advertising space, fell 5 percent to 121.2 pence, the biggest drop since November. The company announced plans to sell 170 million pounds of convertible bonds.
Nike Inc. advanced 1.6 percent to $72 in pre-market New York trading. The world’s largest maker of athletic shoes said third-quarter profit more than doubled, beating analysts’ estimates, as North America posted a sales increase for the first time in a year.
Adidas AG, the second-biggest sporting-goods maker, climbed 3 percent to 38.54 euros.
A report from the Labor Department due at 8:30 a.m. in Washington may show initial claims for U.S. unemployment insurance benefits dropped to 455,000 last week, the fewest in two months, from 462,000 the prior week, according to the median estimate in a Bloomberg survey of economists.
A separate report may show U.S. consumer prices climbed 0.1 percent in February, while the Conference Board’s index of leading economic indicators at 10:00 a.m. may indicate a 0.1 percent gain after increasing 0.3 percent in January.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Last Updated: March 18, 2010 07:44 EDT
