European Stocks Fall Led by UBS Aviva Legrand SocGen IKB
European Stocks Fall, Led by UBS, Aviva, Legrand, SocGen, IKB
By Adria Cimino
Feb. 11 (Bloomberg) — European stocks fell after the Group of
Seven said financial-market turmoil will hurt the economy and
auditors found a “material weakness;; in how American
International Group Inc. values its credit-default swap portfolio.
UBS AG, Europe;s biggest bank by assets, and Aviva Plc slid
after the G-7 said “downside risks persist;; and the group
estimated banks will suffer $400 billion in writedowns. The Dow
Jones Stoxx Insurance Index fell to a 2 1/2 year low. Legrand SA
slipped after UBS analysts advised selling the stock on concern
industrial customers will cut spending.
Europe;s Stoxx 600 Index sank 0.9 percent to 312.79 as of
4:30 p.m. in London. The Stoxx 50 also lost 0.9 percent, and the
Euro Stoxx 50, a measure for the companies in the euro zone,
decreased 0.6 percent.
“Fear is stalking the world,;; said Andy Brough, executive
director at Schroders Investment Management Ltd. in London, who
helps oversee $6.5 billion. For banks “the question is, are
there any more skeletons left on the balance sheets.;;
Stocks pared earlier declines after European Central Bank
council member Michael Bonello in an interview with Dow Jones
newswire said he doesn;t see signs of a “negative impact;; on
European economic growth from the U.S. slowdown. Indexes resumed
their drop after the AIG statement.
European government bonds rose, pushing two-year yields to
the lowest level since March 2006.
The Stoxx 600 has lost 15 percent this year as a housing
contraction, slumping payrolls and auto sales spurred economists
to raise the odds of a recession in the U.S. to 50 percent.
Analysts have cut their 2008 earnings growth estimates for
Stoxx 600 members to 8.6 percent from 10.3 percent in the last
two weeks, according to data compiled by Bloomberg.
`Downside Risks;
Finance ministers and central bankers ended a weekend
meeting in Tokyo with a statement that “downside risks
persist,;; including the U.S. housing slump and tighter credit
conditions. Without proposing specific remedies, the group
pledged “appropriate actions, individually and collectively.;;
AIG, the world;s largest insurer by assets, fell in the U.S.
after auditors found a “material weakness;; in the way the company
values its credit-default swaps. AIG hasn;t yet fully determined
the decline in value of the swaps in the fourth quarter, the New
York-based insurer said in the regulatory filing.
National benchmarks decreased all of the 18 markets in
western Europe except for Denmark. Germany;s DAX lost 0.3
percent. France;s CAC 40 fell 0.6 percent. The U.K.;s FTSE 100
slid 1.1 percent.
“The market is dominated by fears of writedowns and concern
about the economy,;; said Chicuong Dang, an analyst at Richelieu
Finance in Paris. “It;s a nervous market.;;
UBS, Fortis
UBS lost 2.6 percent to 39.94 Swiss francs. Aviva Plc, the
U.K.;s biggest insurer, slid 3.9 percent to 557 pence.
The Dow Jones Stoxx Insurance Index fell 2.6 percent to the
lowest since Sept 22, 2005.
Commerzbank AG, Germany;s second-biggest bank, retreated 3.4
percent to 19.17 euros. Fortis, Belgium;s biggest financial-
services company, decreased 4.2 percent to 13.08 euros. Allianz
SE, Europe;s largest insurer, slipped 2.4 percent to 112.93
euros.
Legrand, the world;s largest maker of electrical switches,
slid 4.5 percent to 18.6 euros. UBS cut its recommendation on the
stock to “sell;; from “neutral;; on concern that profit will be
lower as industrial customers cut spending.
“Sentiment is clearly very much all over the place,;; said
Peter Lucas, global investment strategist at Ashburton Ltd.,
which manages $1.7 billion. “There are a number of positive
indicators out there, but they are equally matched by the
continuing stress in the financial sector.;;
Societe Generale
Societe Generale SA fell 4.8 percent to 74.02 euros. The
French bank, hurt by losses incurred by trader Jerome Kerviel, is
selling shares at 47.50 euros apiece as it seeks to raise 5.5
billion euros ($8 billion), a 39 percent discount to the closing
price on Feb. 8. Analysts had been expecting a discount of as
much as 30 percent.
The bank may post a further 500 million euros in writedowns
linked to the U.S. subprime crisis, Les Echos reported, citing
unidentified people.
UniCredit SpA, Italy;s largest bank by assets, isn;t
interested in buying Societe Generale SA, Chief Executive Officer
Alessandro Profumo said today.
Standard Chartered Plc sank 3.9 percent to 1,506 pence.
Whistlejacket Capital Ltd., a $7.15 billion structured investment
vehicle set up by the U.K. bank that makes most of its profit in
Asia, lost more than half of its net asset value, triggering a
receiver to be appointed to oversee the company.
IKB Tumbles
IKB Deutsche Industriebank AG, the German bank bailed out
after investing in U.S. subprime loans, tumbled 21 percent to
4.99 euros on concern that it will announce further writedowns
and potential buyers may lose interest.
IKB may need as much as 2 billion euros in additional
financial aid because securities it owns have declined in value,
Reuters reported yesterday, citing unidentified people familiar
with the matter. IKB couldn;t be immediately reached for comment.
Nobel Biocare Holding AG sank 7.2 percent to 241.2 francs.
The world;s biggest maker of dental implants reported a 2.8
percent decline in fourth-quarter profit as sales in the U.S. and
Europe slowed.
FKI Plc, the U.K. wire-rope maker that has been approached
about a possible takeover offer, rose 10 percent to 71.25 pence
after the Independent said Blackstone Group LP is considering a
rival bid.
Blackstone is mulling a bid of 90 to 95 pence a share,
higher than the 70 pence a share offered by U.K. investment
company Melrose Plc, the newspaper said.
GlaxoSmithKline Plc advanced 1.6 percent to 1,087 pence. The
world;s second-largest drugmaker was upgraded to “buy;; from
“neutral;; at UBS.
“With our fundamental view largely unchanged and the stock
down;; since Glaxo reported earnings on Feb. 7, “we believe it
is a reasonable time to build positions,;; analysts including
Gbola Amusa wrote in a report.
To contact the reporter on this story:
Adria Cimino in Paris at
