European stocks posted their third weekly drop amid concern that the US Federal Reserve may reduce bond buying as soon as September and as the European Central Bank (ECB) refrained from announcing new stimulus.
Man Group PLC, the biggest publicly traded hedge fund manager, plunged 18 percent after reporting a decline in the net asset value of its flagship fund. Aberdeen Asset Management PLC tumbled 11 percent, as Voestalpine AG climbed 10 percent after raising its dividend and Elan Corp gained 5.5 percent after Royalty Pharma increased its offer for the Irish drugmaker.
National benchmark indices declined in all of western Europe’s 18 markets except Iceland. The UK’s FTSE 100 Index lost 2.6 percent, Germany’s DAX slid 1.1 percent and France’s CAC 40 retreated 1.9 percent.
The ECB kept its benchmark interest rate unchanged and refrained from announcing new stimulus measures, but ECB President Mario Draghi on Thursday said policymakers are prepared to take additional steps if needed.
The STOXX Europe 600 Index fell 1.8 percent to 295.4 for the longest streak of weekly losses in two months. The gauge still rebounded on Friday, trimming a weekly retreat of as much as 3.4 percent, as investors bet that US data showing an increase in both hiring and the unemployment rate left little scope for an immediate reduction in stimulus measures.
Separate statements from Fed officials earlier in the week had spurred concern that the central bank may start trimming its US$85 billion monthly bond purchases in September.
Fed Bank of San Francisco President John Williams said in Stockholm that policymakers may end quantitative easing by the end of the year, while Fed Bank of Dallas President Richard Fisher — who opposed the current round of bond-buying in September last year, as well as the expansion of the program to US Treasuries in December — reiterated his backing for reducing stimulus.
Fed Bank of Kansas City President Esther George supported slowing purchases “as an appropriate next step for monetary policy,” according to a speech.
Also this week, economists at Goldman Sachs Group Inc and Deutsche Bank AG predicted that the Fed could start winding down its bond-buying program.
Still, Fed Bank of Atlanta President Dennis Lockhart on Monday said the US central bank is committed to the program and that the US economy lacks the strength to justify a reduction.