European stocks fell, ending a three-week gain, as earnings from financial companies missed analysts’ estimates and record crude oil weighed on airline shares.
UBS AG posted its first weekly drop since March after Europe’s largest bank announced plans to cut jobs and said clients withdrew a net US$12.2 billion from its asset and wealth-management divisions. UniCredit SpA tumbled after reporting first-quarter profit that missed analysts’ predictions. Swiss Reinsurance Co, the world’s largest reinsurer, said profit fell 53 percent. British Airways Plc led carriers lower as oil rose above US$126 a barrel in New York.
The Dow Jones STOXX 600 Index sank 1.3 percent to 324.85. The measure is down 11 percent this year as losses at the world’s largest banks have totaled US$321 billion.
“The outlook for revenues in the medium term is going to be mediocre” for investment banks, Bob Parker, vice chairman of Credit Suisse Asset Management, which has more than US$600 billion, said in a Bloomberg Television interview. “One factor which is weighing on the equity markets is the high oil price.”
Profits for companies in the STOXX 600 will probably rise 0.13 percent this year, compared with 11 percent growth forecast at the beginning of the year, weekly data compiled by Bloomberg show.
National indexes declined in 13 of the 18 western European markets. France’s CAC 40 decreased 2.2 percent and Germany’s DAX lost 0.6 percent. The UK’s FTSE 100 slipped 0.2 percent. The STOXX 50 Index slumped 2 percent, as did the Euro STOXX 50, a measure for the countries sharing the euro.
European Central Bank policymakers left their benchmark interest rate at a six-year high this week, and the Bank of England kept borrowing costs unchanged at 5 percent after three cuts since December.
Basic-resources stocks were the best-performing group in the STOXX 600 Index this week, adding 1.5 percent.