European stocks fell for the first week in seven as earnings from GlaxoSmithKline PLC to Akzo Nobel NV disappointed investors, sparking concern the worst of the profits slump may not be over.
ICAP PLC sank 11 percent as the world’s largest broker of trades between banks lost 85 percent of its business in the most active part of the mortgage-bond market in six weeks. Drugmaker GlaxoSmithKline lost 3.1 percent as earnings missed analysts’ estimates. Akzo Nobel fell 5.6 percent as the world’s biggest maker of paints posted a first-quarter loss on sliding demand.
“There is still a lot of bad news to come out from the economy,” said Lothar Mentel, London-based chief investment officer at Octopus Investments Ltd, which manages the equivalent of about US$1.1 billion.
Investors should be “prepared for a bumpy ride until the end of the year,” he said in a Bloomberg Television interview.
The Dow Jones STOXX 600 Index slid 0.6 percent to 195.82, ending the longest streak of weekly gains on the measure since 2006. The gauge has rallied 24 percent since March 9 as investors speculated US Treasury Secretary Timothy Geithner’s plan to finance the purchase of as much as US$1 trillion in illiquid assets from banks will help to pull the global economy out of the economic slump.
The UK economy shrank more than economists forecast in the first quarter, marking the biggest contraction since the rise of then-British prime minister Margaret Thatcher in 1979 as manufacturing and business services posted record declines.
Earnings at 55 of the companies in the STOXX 600 that have reported earnings so far since April 7 declined by an average of 25 percent, according to data compiled by Bloomberg.
Credit Suisse Group AG and Debenhams PLC were among companies that gave investors positive surprises when they reported first-quarter results this week.