European stocks posted their first weekly loss in more than a month as investors debated when the US Federal Reserve will scale back momentary stimulus and Chinese manufacturing unexpectedly shrank.
FirstGroup PLC tumbled 43 percent after the UK bus and rail company halted its dividend and announced a rights offer to avert a credit downgrade. SAP AG, the largest maker of enterprise management software, dropped the most in 21 months after changing its board structure. Bankia SA, the nationalized Spanish bank, sank 85 percent before a debt swap next week.
The STOXX Europe 600 Index fell 1.7 percent to 303.35 this week, including the worst drop in 10 months on Thursday after Fed Chairman Ben Bernanke said the US central bank will consider paring its stimulus measures if the US economy improves. The gauge had climbed to the highest level since June 2008 before the selloff, bolstered by monetary policy and better-than-expected US economic data.
The Standard & Poor’s 500 Index fell 0.8 percent on Wednesday as Bernanke said in testimony to US Congress that the pace of asset purchases could be cut “in the next few meetings” if the economy improves.
In Asia, Japan’s Nikkei-225 Stock Average on Thursday posted the steepest retreat since the aftermath of the March 2011 tsunami and earthquake disaster as yields on the nation’s bonds rose. The index had surged 50 percent this year before the drop, the best performance among 24 developed market benchmarks tracked by Bloomberg.
China’s manufacturing is contracting this month for the first time in seven months, a release showed. The preliminary reading of a purchasing managers’ index declined to 49.6 this month from 50.4 last month, HSBC Holdings PLC and Markit Economics said. Fifty is the dividing line between expansion and contraction.
Even so, European economic data showed some improvement. A gauge of eurozone services and factory output increased more than economists forecast this month, adding to signs the region is starting to emerge from its record-long recession. German business confidence climbed for the first time in three months.
Fifteen of the 18 Western European benchmarks declined this week. Germany’s DAX and the CAC 40 in France retreated 1.1 percent, while the UK’s FTSE 100 Index lost 1 percent.
“We don’t think that it is anything else than a correction,” Rcube SAS chief executive Cyril Castelli said in Paris. “You have attractive valuations and a much better liquidity environment.”