European stocks retreated for a second week as a selloff in commodity producers and renewed sovereign-debt concern in the eurozone offset company earnings that topped analysts’ estimates.
The STOXX Europe 600 slipped 0.3 percent to 280.5. The previous week the benchmark gauge dropped 0.9 percent, also led by mining and energy companies as US$99 billion of market value was wiped off commodities.
“It’s been a week of rapid shifts in risk appetite characterized by deleveraging of commodity positions,” said Ioan Smith, a London-based director at Knight Capital Europe Ltd. “Corporate earnings for the most part have been positive, but macro events tended to overshadow.”
The STOXX 600 has still rebounded 7 percent from this year’s low on March 16, as government stimulus measures and company profits bolstered confidence in the global economic recovery.
Ninety-four companies on the STOXX 600 were scheduled to report results this week. Of the 298 that have reported earnings since April 11, 58 percent have beaten analyst forecasts for per-share profit.
Reports this week showed Germany and France drove economic growth in the eurozone in the first quarter, as booming exports fueled domestic spending in the bloc’s core. German and French GDP rose 1.5 percent and 1 percent respectively. Portugal’s economy shrank for a second straight quarter, sending the country back into recession.
Banks in Europe retreated as officials agreed to review the terms of Greece’s bailout and as Standard & Poor’s downgraded Greece’s debt by two levels to “B.” The ratings firm also said that Portuguese banks need to take “decisive actions” to meet their core tier-1 capital requirements.
National benchmark indexes fell in 10 of the 18 Western European markets. Spain’s IBEX 35 plunged 2.4 percent and France’s CAC 40 Index slid 1 percent. The UK’s FTSE 100 Index fell 0.9 percent and Germany’s DAX dropped 1.2 percent.