European stocks were little changed as investors weighed better-than-forecast U.S. retail-sales data before minutes from the latest Federal Reserve meeting.
Diageo Plc dropped 1.2 percent after Chief Executive Officer Ivan Menezes said uncertainties in the global economy will drag on sales growth. Alcatel-Lucent slid 3.7 percent after announcing a capital increase. Metro AG climbed 3.3 percent after Barclays Plc upgraded its recommendation on the retailer.
Nov. 20 (Bloomberg) -- Wells Fargo Asset-Management Chief Executive Officer Mike Niedermeyer talks about China's central bank's reform plan, the implications for Asia, and global investment strategy. Niedermeyer also discusses Federal Reserve monetary policy and its impact on markets. He speaks with Angie Lau on Bloomberg Television's "First Up." (Source: Bloomberg)
The Stoxx Europe 600 Index dropped 0.1 percent to 322.2 at 2:33 p.m. in London, paring earlier losses of as much as 0.4 percent. The benchmark gauge yesterday fell from a five-year high, trimming this year’s gains to 15 percent. It is trading at 15.1 times projected earnings, near its highest level since the end of 2009 and more than the 10-year average of 12.1 times earnings, data compiled by Bloomberg showed.
“The retail sales is without doubt a significantly better number than we could’ve expected,” said Espen Furnes, who helps oversee about $75 billion as a fund manager at Storebrand Asset Management in Oslo. “We’re just seeing a bit of profit-taking in some parts of the European market today, particularly in the periphery. The Fed’s policy stance is well known, and only any change in the language from the minutes could potentially stir investors.”
National benchmark indexes retreated in 14 of the 18 western European markets, with Spain’s IBEX 35 and Greece’s ASE each dropping at least 0.7 percent. The U.K.’s FTSE 100 lost 0.2 percent, France’s CAC 40 declined 0.3 percent and Germany’s DAX slipped less than 0.1 percent.
Retail sales in the U.S. rose more than forecast in October. The 0.4 percent increase was the most in three months and followed no change in September, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 0.1 percent October advance.
A separate release will probably show sales of previously-owned homes slowed to a 5.14 million annual pace, from a 5.29 million rate a month earlier, according to the median projection of economists surveyed by Bloomberg.
The Fed will release minutes of its October policy meeting after European markets close today. The document will reveal more details on the central bank’s decision to maintain its pace of asset purchases at $85 billion a month. Fed policy makers will probably trim the bond-buying to $70 billion at their March 18-19 meeting, according to the median estimate in a Bloomberg survey.
Fed Chairman Ben S. Bernanke said late yesterday the central bank will probably maintain its target interest rate long after ending its monthly bond purchases.
“The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after” the jobless rate breaches the Fed’s 6.5 percent threshold, Bernanke said in a speech to economists in Washington.
Diageo Plc lost 1.2 percent to 2,003.5 pence after CEO Menezes told journalists yesterday he expects the “uncertain” global economy to continue to affect sales growth for the world’s biggest distiller.
Menezes said the company was committed to its profitability target despite slowing growth in some economies. Diageo said in August 2011 it would increase sales excluding acquisitions by an average of 6 percent a year and widen its operating-profit margin by 200 basis points over three years.
Alcatel-Lucent lost 3.7 percent to 2.79 euros after Bank of America Corp. and JPMorgan Chase & Co. placed 660 million preferential subscription rights to the company’s shares to institutional investors. The rights are linked to the network-equipment maker’s American Depositary Receipts, according to a statement.
ThyssenKrupp AG declined 2 percent to 19.01 euros after Reuters cited bankers familiar with the matter as saying that the German steelmaker plans to boost capital by 10 percent. Spokesman Robin Zimmer said in e-mailed comments the company does not rule out a capital increase.
Metro AG gained 3.3 percent to 36.96 euros, posting the biggest two-day increase since September 2011. Barclays upgraded Germany’s biggest retailer to overweight, similar to a buy rating, from equal weight, citing the possible sale of a Russian operation, improving sales trends in key divisions and the possibility of reducing borrowing costs as expensive debt matures. Shares jumped 7.9 percent yesterday after Metro said it is considering a partial initial public offering of its Russian Cash & Carry unit to raise funds for expansion.
Societe Television Francaise 1 jumped 5.1 percent to 14 euros after France beat Ukraine to advance to the next year’s soccer World Cup. TF1, which bought the broadcast rights to the competition, yesterday fell as much as 1.3 percent in intraday trading as Natixis wrote that the probability of the French national team qualifying for the tournament was “very low.”