European stocks snapped a two-week advance as concern mounted that an economic slowdown and record oil prices will curb earnings growth.
Deutsche Boerse AG, the region’s biggest exchange by market value, and HBOS Plc, the UK’s largest mortgage lender, led financial shares lower. DSG International Plc, the biggest UK. consumer electronics retailer, paced a decline in consumer stocks after cutting its earnings forecast for the second time this year.
The Dow Jones STOXX 600 Index dropped 2.6 percent to 310.74. The benchmark has fallen 22 percent from last year’s high on June 1 on speculation US$245 billion in losses and writedowns related to the collapse of US subprime mortgages will hurt profits at financial firms and drag down global economic growth.
“Recent investor psychology was that the worst of the financial liquidity crisis is over, but in reality, it is recessionary fears that could drive this market to new lows,” said Jason McNab, who helps manage about US$1.7 billion at Duet Asset Management Ltd in London.
Analysts this week forecast for the first time that European companies’ earnings will shrink this year. They estimate a 0.1 percent decline, compared with a growth projection of 11 percent at the end of last year, Bloomberg data show.
Crude oil futures in New York climbed to a record high of US$112.21 a barrel on Wednesday after the US Energy Department reported an unexpected decline in US inventories.
National benchmarks decreased in 16 of the 18 western European markets. Germany’s DAX Index slipped 2.4 percent, while France’s CAC 40 lost 2.1 percent. The UK.’s FTSE 100 dropped 0.9 percent. The STOXX 50 retreated 2.5 percent, as did the Eur STOXX 50, a measure for the Europe region.
Indexes extended declines on Friday after General Electric Co, the world’s third-biggest company by market value, reported profit that fell short of analysts’ estimates and its own forecast. The company also reduced its full-year guidance.
“When a bellwether like GE misses the earnings forecast, it is like an exclamation mark,” Carsten Klude, head of investment strategy at M.M. Warburg & Co in Hamburg, said in a Bloomberg Television interview. “We haven’t seen the end of the downward earnings revisions yet.”
Deutsche Boerse retreated 8.3 percent. The operator of the Frankfurt bourse said on Tuesday that its Clearstream settlement division processed fewer transactions last month.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
‘A SURVIVAL QUESTION’: US officials have been urging the opposition KMT and TPP not to block defense spending, especially the special defense budget, an official said The US plans to ramp up weapons sales to Taiwan to a level exceeding US President Donald Trump’s first term as part of an effort to deter China as it intensifies military pressure on the nation, two US officials said on condition of anonymity. If US arms sales do accelerate, it could ease worries about the extent of Trump’s commitment to Taiwan. It would also add new friction to the tense US-China relationship. The officials said they expect US approvals for weapons sales to Taiwan over the next four years to surpass those in Trump’s first term, with one of them saying
BEIJING’S ‘PAWN’: ‘We, as Chinese, should never forget our roots, history, culture,’ Want Want Holdings general manager Tsai Wang-ting said at a summit in China The Mainland Affairs Council (MAC) yesterday condemned Want Want China Times Media Group (旺旺中時媒體集團) for making comments at the Cross-Strait Chinese Culture Summit that it said have damaged Taiwan’s sovereignty, adding that it would investigate if the group had colluded with China in the matter and contravened cross-strait regulations. The council issued a statement after Want Want Holdings (旺旺集團有限公司) general manager Tsai Wang-ting (蔡旺庭), the third son of the group’s founder, Tsai Eng-meng (蔡衍明), said at the summit last week that the group originated in “Chinese Taiwan,” and has developed and prospered in “the motherland.” “We, as Chinese, should never
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