European Stocks U.S. Futures Decline; Japanese Shares Rise
European Stocks, U.S. Futures Decline; Japanese Shares Rise
By Andreas Hippin
Feb. 7 (Bloomberg) — European stocks and U.S. index futures
declined after Infineon Technologies AG, Cisco Systems Inc. and
Unilever said demand is slowing, increasing concern that
economies are cooling.
Infineon dropped the most ever in Frankfurt, while Unilever
slipped in London. Cisco, the world;s biggest maker of computer-
networking equipment, slid in Germany. Daimler AG and Renault SA
led a retreat by automakers, the region;s worst-performing stocks
this year. Japanese stocks rose as Softbank Corp. led a rally by
mobile-phone operators.
“Equity markets reflect a recession in the U.S.,;; said
Thomas Romig, who helps manage the equivalent of $75 billion in
assets at Cominvest Asset Management in Frankfurt, in a Bloomberg
Television interview. “Interest-rate cuts might not be enough.;;
The Stoxx 600 lost 1.7 percent to 314.93 as of 12:17 p.m. in
London as investors awaited a rate decision from the European
Central Bank. Stocks maintained losses after the Bank of England
cut its key rate. The European benchmark has lost 14 percent this
year, while the MSCI World Index of 23 developed markets has
dropped 11 percent.
Stocks extended declines after GlaxoSmithKline Plc,
Europe;s largest drugmaker, reported profit that trailed
analysts; estimates.
Futures on the Standard %26amp; Poor;s 500 Index slipped 0.3 percent,
while the Nikkei 225 Stock Average gained 0.8 percent in Tokyo.
U.S. stocks fell yesterday as oil prices slid, Macy;s Inc.
cut its earnings forecast and a Federal Reserve official signaled
that higher inflation may prevent more interest-rate reductions.
Rate Decisions
In the U.K., policy makers cut their benchmark rate by a
quarter point to 5.25 percent today, as expected by all but two
of 61 economists surveyed by Bloomberg News. ECB President Jean-
Claude Trichet may indicate the region;s expansion isn;t as
strong as anticipated as the bank keeps its key rate at 4
percent, economists said before the decision.
National benchmarks decreased in all 18 western European
markets. France;s CAC 40 retreated 1.4 percent, and the U.K.;s
FTSE 100 sank 1.7 percent. Germany;s DAX slipped 1.6 percent.
The Stoxx 50 dropped 0.7 percent, and the Euro Stoxx 50, a
measure for the nations sharing the euro, sank 0.8 percent.
Infineon, Europe;s second-biggest semiconductor maker,
tumbled 17 percent to 5.57 euros, the biggest loss in the Stoxx
600 today, after reporting its fourth straight loss and trimming
its sales forecast.
The net loss in the first quarter ended Dec. 31 was 396
million euros ($579 million), compared with a year-earlier profit
of 120 million euros. Infineon said sales will rise by less than
10 percent this year excluding its memory-chip unit Qimonda AG,
versus a December forecast of as much as 10 percent.
ASML, Cisco
ASML Holding NV sank 3.6 percent to 16.98 euros. Nokia Oyj,
the world;s biggest producer of mobile-phone handsets, dropped
2.8 percent to 23.49 euros.
Cisco Systems sank $1.81 to $21.27 in German trading. Chief
Executive Officer John Chambers said late yesterday a sales slump
may last months. Cisco;s forecast helped push Nasdaq-100 futures
down 0.8 percent.
The Nasdaq Composite Index, which gets 42 percent of its
value from technology shares, has lost 14 percent this year,
compared with a 9.7 percent drop for the S%26amp;P 500. Cisco;s
comments followed disappointing forecasts last month from Apple
Inc., the maker of Macintosh computers and iPod media players,
and Intel Corp., the world;s largest chipmaker.
JPMorgan Chase %26amp; Co. lowered its recommendation for Cisco to
“neutral;; from “overweight.;;
Unilever, Glaxo
Unilever dropped 1.6 percent to 1,629 pence. The world;s
second-largest maker of consumer products reported a 64 percent
drop in fourth-quarter earnings because of costs to reduce jobs.
Chief Executive Officer Patrick Cescau said the U.S. market
is “softening;; and European growth will “moderate;; in the
current quarter.
GlaxoSmithKline dropped 6.9 percent to 1,087 pence. Fourth-
quarter profit fell to 1.06 billion pounds ($2.1 billion),
missing the 1.13 billion-pound median estimate in a Bloomberg
survey of 11 analysts.
Renault decreased 4.5 percent to 68.27 euros as Merrill
Lynch %26amp; Co. took France;s second-largest carmaker off its
“Europe 1;; list. Daimler, the world;s second-biggest maker of
luxury cars, lost 1.5 percent to 50.66 euros. Porsche SE, the
maker of the Cayenne sport-utility vehicle, retreated 4.8 percent
to 1,085.99 euros.
The Stoxx Automobiles %26amp; Parts Index has lost 7 percent so
far this week, the worst performance among the 18 industry groups
in the Stoxx 600.
“In such an environment of economic uncertainty, consumers
shelve plans for buying a new car,;; said Peter Braendle, who
helps manage the equivalent of $56 billion at Swisscanto Asset
Management in Zurich. “The U.S. slowdown hit auto stocks. We are
underweight car stocks in our portfolio.;;
Unibail, Givaudan
Unibail-Rodamco SA sank 2.9 percent to 156.20 euros.
Europe;s largest real estate investment trust said profit fell 55
percent last year as the company wrote down 1.34 billion euros of
goodwill following the acquisition of Rodamco Europe NV.
Givaudan SA dropped 4.8 percent to 992 Swiss francs.
Goldman, Sachs %26amp; Co. downgraded the world;s biggest flavors and
fragrances maker to “sell;; from “neutral.;;
Yell Group Plc plunged 14 percent to 283.75 pence. The
publisher of the U.K.;s Yellow Pages phone books said nine-month
net income dropped to 150.6 million pounds ($295 million) from
159.8 million pounds a year earlier.
Merrill Lynch lowered its recommendation on the stock to
“neutral;; from “buy.;;
Deutsche Postbank AG, Germany;s biggest consumer bank by
clients, jumped 4 percent to 59.29 euros after Deutsche Bank AG;s
Chief Executive Officer Josef Ackermann said he;s interested in
looking at the bank.
“If someone approaches us, we would be open for talks,;;
Ackermann told reporters today in Frankfurt. “It would be a
sensible solution for Germany.;;
To contact the reporter on this story:
Andreas Hippin in Frankfurt at
