Sun, Mar 09, 2014 - Page 15 News List

European stocks fall on weak earnings, US-Russia face-off

UNCERTAINTY:The STOXX Europe 600 dipped 1.5 percent on investor concern over corporate profits and that Crimea may secede from Ukraine

Bloomberg

European stocks posted their first weekly drop since January amid disappointing corporate earnings and as Russia and the US faced off over the crisis in Ukraine.

Getinge AB plunged the most ever after forecasting first-quarter profit that were lower than analysts’ estimates. Balfour Beatty PLC fell 7.9 percent after reporting a 32 percent drop in annual earnings. Orange SA rose 13 percent after predicting that a key measure of profit would not fall this year for the first time in at least five years. Aviva advanced 7.4 percent after posting an increase in operating income for last year.

The STOXX Europe 600 Index declined 1.5 percent to 333.06 this week amid investor concern the Crimea region may secede from Ukraine. The benchmark gauge rallied for four successive weeks as US Federal Reserve Chair Janet Yellen pledged to follow her predecessor’s policies to support the US economy.

“The reporting season has generally been poor, with companies being fairly cautious in their outlook for the first quarter,” said Andrea Williams, head of European equities at Royal London Asset Management in London. “The fear about Ukraine is also causing some uncertainty. The vote for independence could still influence the market and it depends if trouble widens to other parts.”

National benchmark indices dropped in 13 of the 18 markets in Western Europe. Germany’s DAX lost 3.5 percent, the UK’s FTSE 100 fell 1.4 percent and France’s CAC 40 slid 1 percent.

Russia signaled it may stop supplying gas to Ukraine unless it pays US$2 billion owed for natural gas, putting pressure on its cash-strapped neighbor as the two nations quarrel over the future of Crimea. The predominantly Russian-speaking region plans a referendum on March 16 on whether to remain part of Ukraine or join Russia.

US President Barack Obama said this week leaders were preparing sanctions against Russia to make it costly for its Cold War adversary to interfere in Ukrainian affairs. Russian President Vladimir Putin said he saw no immediate need to invade Ukraine or annex Crimea.

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