(BN) European Stocks Decline as Software AG, Espirito Santo Retreat

(BN) European Stocks Decline as Software AG, Espirito Santo Retreat

Ion-Marc Valahu répond à Bloomberg – 15.07.2014

“It looks like Yellen has spooked the markets,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Given the strong Empire manufacturing release today it seems Yellen’s testimony is too dovish and that the Fed might be behind the ball.”

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European Stocks Decline as Software AG, Espirito Santo Retreat
2014-07-15 15:32:10.456 GMT

By Namitha Jagadeesh
July 15 (Bloomberg) — European stocks declined after their biggest rally in more than a week, dragged lower by technology companies, as investors considered comments from Federal Reserve Chair Janet Yellen.
Software AG lost 19 percent after saying earnings fell in the second quarter. Imperial Tobacco Group Plc dropped 3.5 percent. Banco Espirito Santo SA tumbled a seventh day as a group company faces a debt payment due today. Gjensidige Forsikring ASA gained 3.6 percent after saying profit increased in the second quarter.
The Stoxx Europe 600 Index fell 0.3 percent to 338.82 at
4:30 p.m. in London. The gauge advanced 0.9 percent yesterday after dropping the most since March last week on concern over financial stress at some Portuguese banks.
“It looks like Yellen has spooked the markets,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Given the strong Empire manufacturing release today it seems Yellen’s testimony is too dovish and that the Fed might be behind the ball.”
Yellen told lawmakers the Fed must press on with monetary stimulus as “significant slack” remains in labor markets and inflation is still below the central bank’s goal. Rates will probably stay low for a “considerable period” after bond purchases end, which could happen following the Fed’s October meeting, she said.
A report showed U.S. retail sales rose 0.2 percent in June from a revised 0.5 percent increase in May. The median estimate of economists surveyed by Bloomberg was for a gain of 0.6 percent. A separate release showed the New York Fed’s Empire manufacturing gauge rose to 25.6 in July, beating the median forecast of 17.

German Confidence

In Germany, the ZEW Center for European Economic Research said its index of investor and analyst expectations dropped to
27.1 this month from 29.8 in June. That missed the 28.2 median forecast of economists in a Bloomberg News survey. The gauge aims to predict economic developments six months in advance.
Fourteen of the 18 western-European markets dropped today, with national indexes in Spain and Italy posting some of the biggest declines. France’s CAC 40 lost 0.9 percent. Germany’s DAX slid 0.4 percent and the U.K.’s FTSE 100 lost 0.4 percent.
The volume of Stoxx 600-listed shares changing hands today was 11 percent greater than the 30-day average, according to data compiled by Bloomberg.
Software AG sank 19 percent to 20.07 euros. Germany’s second-largest software maker said operating profit dropped 23 percent to 45 million euros ($61 million) in the second quarter because of project delays. The company also lowered its full- year forecast.
Imperial Tobacco fell 3.5 percent to 2,643 pence.
The drops helped send Stoxx 600 personal and household- goods companies and technology shares down more than 1 percent, the most among 19 industry groups.

Espirito Santo

Espirito Santo plunged 11 percent to 39.6 euro cents, its lowest price since June 2012. Rioforte Investments SA, a holding company of the troubled Portuguese group, owes 847 million euros
($1.2 billion) of short-term debt to Portugal Telecom SGPS SA, according to a June 30 regulatory filing by the nation’s biggest phone company. Rioforte holds a 49 percent stake in Luxembourg- based Espirito Santo Financial Group SA, which in turn owns 20 percent of Espirito Santo.
Spain’s Bankia SA dropped 3 percent to 1.37 euros and Italy’s Mediobanca SpA lost 4.1 percent to 6.78 euros.
Draegerwerk AG slid 16 percent to 65.71 euros. The German maker of medical equipment cut its 2014 sales growth estimate to
2 percent to 4 percent from 3 percent to 6 percent. The company also forecast an annual margin on earnings before interest and taxes of 4.5 percent to 6.5 percent, citing a strong euro, reduced business from Russia and slower U.S. demand.
JM AB dropped 8.9 percent to 231.30 kronor. The Swedish builder reported second-quarter net income of 316 million kronor
($46.5 million), missing the 325 million kronor estimate of analysts in a Bloomberg survey.

Gjensidige Forsikring

Gjensidige Forsikring advanced 3.6 percent to 120.90 kroner after the Norwegian insurer said pretax profit rose to 1.75 billion kroner in the second quarter from 1.08 million kroner a year earlier. Analysts on average had forecast 1.34 billion kroner. The company cited strong growth in premium and a fewer large losses.
PSA Peugeot Citroen climbed 3.7 percent to 11.50 euros, extending yesterday’s 3.1 percent gain. Europe’s second-biggest carmaker reiterated the financial targets it presented in April.
Peugeot expects recurring positive operating free cash flow by
2016 at the latest, according to an e-mailed statement.
JPMorgan Chase & Co. raised its rating on the stock to overweight, similar to a buy recommendation, from neutral, saying Peugeot’s first-half results will mark the start of a recovery in free cash flow.

For Related News and Information:
Developed Markets View: DMMV
World Stock Indexes: WEI
Stoxx 600 Market Map: SXXP IMAP Top Stories on Stocks: TOP STK Equity Screening: EQS
Graphing: GRAPH
Feature Stories on Stocks: TNI STK GREET

–With assistance from Jonathan Morgan in Frankfurt.

To contact the reporter on this story:
Namitha Jagadeesh in London at +44-20-7073-3596 or njagadeesh@bloomberg.net To contact the editors responsible for this story:
Cecile Vannucci at +44-20-3525-7032 or
cvannucci1@bloomberg.net
Srinivasan Sivabalan