BL: European Stocks, U.S. Futures Rise on Economic Growth; Asian Shares Rally
By Sarah Jones
June 10 (Bloomberg) -- European stocks declined amid lingering concern about the region’s debt crisis and as BP Plc tumbled to the lowest level in 13 years. Asian shares and U.S. index futures rallied.
BP led a selloff in energy stocks, tumbling as much as 12 percent, as an estimate suggested its damaged well is seeping more oil than previously calculated into the Gulf of Mexico. UBS AG declined 1.7 percent as Societe Generale SA lowered its earnings forecast for the Swiss bank.
The benchmark Stoxx Europe 600 Index dropped 0.8 percent to 242.61 at 8:22 a.m. in London, extending the gauge’s selloff from this year’s high on April 15 to 10 percent amid continue concern European nations will struggle to fund their deficits. The measure is trading at about 14 times the reported earnings of its companies, near the lowest valuation for 17 months.
European Central Bank President Jean-Claude Trichet holds a press conference at 2:30 p.m. in Frankfurt today after a policy meeting at which economists predict will leave the benchmark rate at a record low of 1 percent. Trichet is under pressure to explain how far he’s prepared to wade into government bond markets as the ECB’s purchases split policy makers and borrowing costs in some countries continue to climb.
“There’s no escaping the eurozone debt woes,” said Ben Potter, a Melbourne-based research analyst at IG Markets. “Any optimism that had been accrued by equities has seemed to edge away.”
U.S Growth
U.S. stocks declined yesterday, led by a retreat in energy and banking shares after BP plunged and as the Federal Reserve’s Beige Book survey said economic growth was “modest” in most districts. Futures on the Standard & Poor’s 500 Index rallied 0.5 percent today.
In Asia, the MSCI Asia Pacific Index also advanced, rising 1 percent, after Australian jobs and Japan’s economic growth beat estimates, easing concern that Europe’s debt crisis will curb growth around the world. A separate report showed China’s exports jumped 48.5 percent in May from a year earlier, the biggest gain in more than six years.
Fed Chairman Ben S. Bernanke said the U.S. recovery, while being sustained by private demand, isn’t as strong as he prefers and faces risks from Europe’s debt crisis that may require further central bank action.
‘Not as Fast’
U.S. growth is “not as fast as we would like,” Bernanke told the House Budget Committee in testimony yesterday, hours before the Beige Book regional business survey said the economy expanded in all 12 Federal Reserve districts for the first time in more than two years, with a “modest” pace in many regions.
BP tumbled as much as 12 percent to 345.15 pence, its lowest level since 1997 before adjusting for dividends, following a 16 percent selloff in the company’s American depositary receipts yesterday. The cost to protect against a default on the energy company soared to a record and bond prices plummeted after an estimate its damaged well is leaking more oil than previously calculated.
Ian MacDonald, an oceanographer at Florida State University in Tallahassee estimated the well is leaking 26,500 barrels to 30,000 barrels a day into the Gulf of Mexico, six times more than the figure used by BP and the government from April 28 to May 27.
‘Strong Company’
BP today said in a statement that it was not aware of any reason for recent share price movements and added that it is facing the Gulf of Mexico oil spill as a “strong company” with generating cashflow.
UBS retreated 1.7 percent to 14.2 Swiss francs as Societe Generale lowered its estimate on earnings and share price, citing comments from Chief Financial Officer John Cryan at a meeting who said that an environment of risk aversion since May will affect the business.
In a report today, Societe Generale lowered its 2010 and 2011 per-share profit estimate for UBS by 10 percent and 8 percent respectively. The analysts lowered a share-price forecast on the Swiss bank to 15.6 francs from 16.8 francs.
Separately, Societe Generale lost 2 percent to 31.12 euros. France’s second-largest bank by market value said it isn’t expecting any “bad surprises” in the second quarter and called speculation about derivatives losses “totally unfounded.”
“We have been very cautious in managing our risk and exposure very tightly, so therefore there will be no bad surprises for us,” Michel Peretie, head of the corporate and investment banking unit, told reporters at a conference in Vienna yesterday.
Home Retail Group Plc declined 5.5 percent to 225 pence after the company said like-for-like sales at the Argos chain fell 8.1 percent in the first quarter. Revenue at the Homebase chain declined 1.4 percent on the same basis.
UK Coal Plc lost 1.2 percent to 41 pence after Hargreaves Services Plc said it no longer intends to pursue a merger with the U.K.’s biggest producer of the fuel.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
Last Updated: June 10, 2010 03:27 EDT
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