European (SXXP) stocks fell for a second day after the Federal Reserve damped expectations of more monetary stimulus for the U.S. and Spain sold fewer bonds than its maximum target. U.S. futures and Asian stocks declined.
Volvo AB (VOLVB) slid 3.6 percent after ACT Research said North American preliminary truck orders for the industry in March were less than expected. Veolia Environnement SA (VIE) lost 3.5 percent after Les Echos said the company may decide to take sole control of a ferry services company. BTG Plc (BGC) rose 1.7 percent on higher- than-forecast sales.
Minutes from the Fed meeting “were not encouraging if you are a bull who’s hoping to hear that the door is still open for further possible stimulus,” said Simon Denham, managing director of Capital Spreads in London. “After each rally people start to get excited that we could push higher and break through to new highs, but then the markets come up against resistance and fail to follow through.”The Stoxx Europe 600 Index retreated 1.1 percent to 261.39 at 11:20 a.m. in London. The number of shares changing hands on the benchmark index was 35 percent more than the average over 30 days, data compiled by Bloomberg show. Standard & Poor’s 500 Index (SPM2) futures expiring in June dropped 0.8 percent, while the MSCI Asia Pacific Index (MXAP) slipped 1.3 percent.
The Fed is holding off on increasing monetary accommodation unless U.S. economic growth falters or prices rise at a rate slower than its 2 percent target, minutes released yesterday from a March 13 policy meeting showed.
“A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to the minutes.
Spanish Auction
Stocks fell as Spain sold 2.6 billion euros ($3.4 billion) of bonds, near the minimum target, and borrowing costs rose in its first auction since the country said public debt will surge to a record this year. The Treasury had set a range of 2.5 billion euros to 3.5 billion euros for the sale.
The European Central Bank will leave its benchmark interest rate unchanged at a record low of 1 percent, economists in a Bloomberg News survey forecast. The announcement is due at 1:45 p.m. in Frankfurt and ECB President Mario Draghi will speak at a press conference at 2:30 p.m.
Euro Data
Euro-area retail sales declined in February, led by Germany, as rising oil prices and government budget cuts prompted consumers to pare spending.
Sales fell 0.1 percent from January, when they rose a revised 1.1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a drop of 0.2 percent, the median of 22 estimates in a Bloomberg News survey showed. Sales declined 2.1 percent from a year earlier.
Euro-area services and manufacturing output contracted for a second month in March. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 49.1 from 49.3 in February, London-based Markit Economics said today. That’s above an initial estimate of 48.7 on March 22. A reading below 50 indicates contraction.
In Germany, factory orders rose 0.3 percent in February, the Economy Ministry in Berlin said today. That’s less than the 1.5 percent-increase predicted by economists in a Bloomberg News survey.
Volvo Declines
Volvo lost 3.6 percent to 94.85 kronor after ACT Research said preliminary Class 8 truck orders in North America for March were 20,000 units, the second consecutive month that orders came in “below expectations.”
Veolia slipped 3.5 percent to 11.51 euros after Les Echos said without citing anyone that the company may decide today to take sole control of Coriscan ferry services operator Societe Nationale Maritime Corse Mediterranee.
An index of auto companies was the worst performer among 19 industry groups on the Stoxx 600 after U.S. sales of cars and light trucks rose to a 14.4 million seasonally adjusted annual rate, falling short of the 14.5 million median estimate of 16 analysts in a Bloomberg survey.
Peugeot SA (UG) dropped 4.1 percent to 10.97 euros, Renault SA (RNO) slipped 2.6 percent to 37.98 euros, and Porsche SE (PAH3) retreated 2 percent to 43.62 euros.
Royal Bank of Scotland Group Plc slid 2.8 percent to 26.15 pence as three people briefed on the matter said the lender pulled a $207 million sale of bonds backed by its own derivative trades in February. Investors scarred by losses on exotic debt balked at the complexity of the deal, the people said.
Hikma Falls
Hikma Pharmaceuticals Plc (HIK) lost 1.9 percent to 669.50 pence after GlaxoSmithKline Plc (GSK) and Pfizer Inc. sued the company for planning to sell an injectable blood-clot treatment, saying it infringes a patent licensed by Glaxo for argatroban.
BTG gained 1.7 percent to 344 pence after the company said sales for the year ended March 31 would reach as much as 195 million pounds ($309 million), more than previously forecast, because of higher-than-expected royalties from two drugs.
Telecom Italia SpA (TIT) advanced 1.5 percent to 88.55 euro cents after Chairman Franco Bernabe said in an interview with Il Sole 24 Ore the company may consider a spinoff of its network if it allows “a more favorable regulatory framework.”
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