European Stocks Post Biggest Weekly Decline in 2013

By Sofia Horta e Costa

European stocks posted their biggest weekly decline since November as reports signaled that the economic rebound in the U.S. has slowed, while the European Central Bank said risks remain to the euro area’s recovery.

Vodafone Group Plc lost 2.1 percent after Verizon Communications Inc. denied that it has considered buying the mobile-phone operator. Kazakhmys Plc and Evraz Plc slumped more than 7 percent this week, leading a gauge of mining stocks to its longest streak of losses in 13 years. Alcatel-Lucent SA advanced 3.9 percent as Deutsche Bank AG recommended that investors buy shares in the telecommunications equipment maker. The Stoxx Europe 600 Index (SXXP) fell 2.3 percent in the four-day week following the Easter holiday, completing its longest stretch of losses in more than 10 months. The slump pared the gauge’s advance so far this year to 2.7 percent. The Stoxx 600 had gained as much as 6.7 percent amid speculation that central banks would continue to provide monetary stimulus.

“Markets are going to be vulnerable to bad news from the States,” Philip Saunders, who helps oversee about $105 billion at Investec Asset Management Ltd. in London, told Francine Lacqua on Bloomberg Television. “Growth, or the lack of it inEurope, is the big issue. We’re in a depression and that’s not going to go away. The Japanese authorities have finally gotten round to dealing with it after 20 years; let’s hope it doesn’t take that long in Europe.”

Bank of Japan Governor Haruhiko Kuroda increased the lender’s monthly bond purchases to 7 trillion yen ($72 billion) on April 4. The central bank will double its monetary base within two years, according to a statement issued after Kuroda’s first meeting in charge of the institution.

Equities Slide

National benchmark indexes still fell in all 18 western- European markets this week. The U.K.’s FTSE 100 dropped 2.5 percent, while France’s CAC 40 and Germany’s DAX retreated 1.8 percent. The stock market in Cyprus declined 2.5 percent after opening for the first time since March 15.

European stocks extended losses yesterday as a Labor Department report showed the U.S. economy created fewer jobs last month than economists’ had forecast. Payrolls grew by 88,000 workers in March, their smallest increase in nine months. The median economist estimate in a Bloomberg survey had called for net hiring to climb by 190,000.

A release on April 3 showed that services industries in the U.S. expanded at a slower pace than forecast. The Institute for Supply Management’s index of non-manufacturing activity, which comprises almost 90 percent of the world’s largest economy, fell more than economists had predicted for March.

European Recovery

In Europe, central bank president Mario Draghi said that risks remain to the economic recovery in the second half of this year. The European Central Bank left its benchmark interest rate at a record low of 0.75 percent on April 4, matching most economist estimates.

In Asia, North Korea intensified its rhetoric against South Korea and the U.S., threatening to wage nuclear war against its enemies. The regime also moved a missile to a launch site on the country’s east coast.

Vodafone slid 2.1 percent, the stock’s biggest retreat in six weeks. Verizon denied a Financial Times report that said it had discussed a plan with AT&T Inc. to make a joint offer for the U.K. telecommunications operator.

An index of commodity producers fell for a seventh week, its longest streak of losses since March 2000. Evraz tumbled 13 percent for the biggest weekly retreat since Russia’s biggest steelmaker first started trading on the London Stock Exchange in November 2011. Kazakhmys, Kazakhstan’s largest copper producer, slumped 7 percent this week.

European Banks

Banca Monte dei Paschi di Siena SpA slumped 7.2 percent, dropping for a fourth week. The world’s oldest lender reported a bigger-than-estimated quarterly loss on April 2 as bad-loan provisions soared.

The Euro Stoxx Banks Index of lenders operating in the 17- nation single currency dropped for a fourth week. The gauge has retreated 21 percent from its peak on Jan. 28. Portuguese lenders Banco Comercial Portugues SA and Banco Espirito Santo SA slipped more than 8 percent, while BNP Paribas SA, France’s biggest bank, sank to a 4 1/2-month low.

European aviation companies declined on concern a new strain of the bird-flu virus in China will reduce demand for flights in the region. Air France-KLM Group, Deutsche Lufthansa AG and British Airways’ parent International Consolidated Airlines Group SA each tumbled more than 7 percent. The world’s airlines suffered a $10 billion loss a decade ago after a previous outbreak killed 774 people in 2002 and 2003.

Alcatel-Lucent advanced 3.9 percent as Deutsche Bank raised its recommendation on the stock to buy from neutral, citing the increased likelihood that profit margins will recover through to next year.

Jeronimo Martins SGPS SA jumped 4.1 percent this week. Portugal’s largest retailer posted its biggest rally in six weeks even as European retailers slumped the most in 4 1/2 months as data showed sales in the euro-area slowed in February.

To contact the reporter on this story: Sofia Horta e Costa in London atshortaecosta@bloomberg.net

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