Sun, Feb 27, 2011 - Page 10 News List

European stocks post biggest weekly drop since July

Bloomberg

European stocks posted the biggest weekly retreat in seven months, led by declines in airlines and automakers, as Libya’s violent uprising boosted tension in North Africa and the Middle East, sending oil soaring.

Air France-KLM Group and Deutsche Lufthansa AG, Europe’s largest carriers, fell more than 4 percent amid concern the cost of fuel will rise. Oil companies Eni SpA and OMV AG dropped as the revolts hindered their Libyan operations. Porsche SE sank 14 percent as the sports-car maker said its planned merger with Volkswagen AG will probably be delayed into next year because of German legal obstacles.

The benchmark STOXX Europe 600 Index slumped 2.4 percent this week, the biggest drop since July, as protests against Libyan leader Muammar Qaddafi threatened to escalate into civil war.

Demonstrations over the past two months have forced Tunisian president Zine El Abidine Ben Ali to flee the country and unseated Egyptian president Hosni Mubarak.

“Investors were pretty scared,” said Arnaud Scarpaci, a fund manager at Agilis Gestion in Paris, which oversees about US$110 million. “This was the first alert to say that 2011 isn’t going to be a smooth, tranquil river for stocks. The most difficult thing now isn’t to oust Qaddafi, but to put in place a democracy.”

European stocks trimmed their losses for the week on Friday as US consumer confidence rose more than forecast.

The Thomson Reuters/University of Michigan final index of consumer sentiment for last month climbed to 77.5 from 74.2 the prior month. Other releases showed jobless claims fell more than estimated last week and orders for durable goods increased last month.

National benchmark indices fell in all of Europe’s 18 western markets, except Norway and Denmark. France’s CAC 40 Index slid 2.1 percent, the UK’s FTSE 100 retreated 1.3 percent and Germany’s DAX tumbled 3.3 percent.

Technical problems forced a six-and-a-half-hour delay to the start of trading in Italy on Tuesday and a four-hour shutdown of the London Stock Exchange on Friday.

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