European stocks declined this week after experiencing their biggest three-day rally since April, which sent valuations to their highest level since 2009.
Erste Group Bank AG tumbled the most since February 2009 after predicting a full-year loss, while BNP Paribas SA lost 2.1 percent after Macquarie Group Ltd downgraded the French lender.
Meanwhile, JC Decaux SA added 0.9 percent when HSBC Holdings PLC raised its recommendation on the shares.
The STOXX Europe 600 Index slipped 0.3 percent to 347.95 at the close of trading, but posted a 1.8 percent increase for the week, its biggest weekly advance since March.
The gauge rose 2.1 percent in the three days through WEdnesday as US jobs data exceeded economists’ forecasts. The US stock market was closed on Firday for the Independence Day holiday.
The STOXX’s weekly gain pushed its valuation to 15.7 times the estimated earnings of its members, the highest level since 2009, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index trades at 16.8 times projected profit
“We’re seeing a pause in European markets today [Friday],” said Pierre Mouton, who helps oversee US$8 billion at Notz, Stucki & Cie.
“With the very good economic news from the US, investors should turn more positive, but I would expect some profit taking when the earnings season begins. Valuations are attractive compared with other markets, but earnings don’t grow that much,” Mouton added.
National benchmark indices fell in 16 of the 18 Western European markets on Friday, with France’s CAC 40 retreating 0.5 percent, while the UK’s FTSE 100 rose less than 0.1 percent and Germany’s DAX slipped 0.2 percent.
Erste slid 16 percent to 19.49 euros after forecasting a net loss of as much as 1.6 billion euros (US$2.2 billion) for the year because of bad debt charges and writedowns in Hungary and Romania.
The Austrian bank, which earns most of its income in Eastern Europe, predicted that its loan loss provisions will rise to 2.4 billion euros this year, 40 percent more than previously estimated.