Sun, May 18, 2014 - Page 15 News List

EU stocks weather weak GDP data

Bloomberg

European stocks were little changed this week, following four weeks of gains, as eurozone economic growth missed estimates and investors weighed equity valuations amid mixed earnings reports.

Banco Espirito Santo SA slumped 18 percent after announcing a capital increase and Banco Comercial Portugues SA lost 12 percent after a report that it plans to do the same.

Mediaset SpA fell 14 percent as the Italian broadcaster posted a firstquarter loss and warned of weak advertising demand. Thomas Cook Group PLC slid 15 percent after saying its UK customers opted for shorter, cheaper summer holidays.

Meanwhile, Pandora A/S climbed 11 percent after the jewelry maker raised its full-year sales forecast.

The STOXX Europe 600 Index rose 0.1 percent this week to 338.99 and reached its highest level since January 2008 on Tuesday, sending valuations to their highest this year.

The STOXX 600 traded at 15.2 times the projected earnings of its members that day, up from about 13.8 times in January.

“The economic recovery in Europe is going to take a long time,” David Hussey, head of European equities at Manulife Asset Management, said by telephone from London.

“There’s a risk that the rebound will be a little behind consensus and the markets correct on that. The catalyst to move higher will have to be an earnings recovery, but if you get even a slight disappointment then markets begin to worry that this won’t happen soon.”

The eurozone economy grew 0.2 percent in the first quarter from the previous three months, missing the economists’ median estimate of 0.4 percent, data from the Eurostat showed this week.

The Netherlands’ GDP posted the biggest contraction in the currency bloc, falling 1.4 percent, as Italy and Portugal’s economies unexpectedly

shrank 0.1 percent and 0.7 percent respectively, while French growth also missed estimates.

The average daily volume of shares changing hands in STOXX 600 companies across all exchanges was 16 percent higher than that of the past 12 months, data compiled by Bloomberg showed.

National benchmark indices fell in 12 of the 18 western European markets this week.

France’s CAC 40 fell 0.5 percent, Germany’s DAX added 0.5 percent, the FTSE 100 gained 0.6 percent in London, Greece’s ASE Index dropped 8.7 percent for the largest loss among all 24 developed-market indices tracked by Bloomberg and Portugal’s PSI 20 fell 5.6 percent in its worst week since May 2012.

A gauge of travel and leisure stocks dropped 3.3 percent this week, the most of 19 industry groups on the STOXX 600.

Low-cost carrier EasyJet PLC fell 10 percent, while Ryanair Holdings PLC slumped 8 percent and International Consolidated Airlines

Group SA, which owns British Airways, declined 6.9 percent. Thomas Cook, Europe’s second- largest tour operator, dropped after summer bookings by British holidaymakers, who accounted for about a quarter of sales in the first half of the company’s financial year, slipped 1 percent from a year earlier, and average selling prices fell 3 percent in the UK, it said.

Banco Espirito Santo slumped to its worst weekly fall in two years, after its first-quarter loss widened to 89.2 million euros (US$122 million) from 62 million euros last year.

Banco Comercial Portugues’ retreat was its largest weekly decline since June 2012.

The two banks’ shares make up about 19 percent of the PSI 20.

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