European stocks retreated this week, extending the Dow Jones STOXX 600 Index’s second straight weekly decline, as healthcare and gambling companies sank and UBS AG forecast a second-quarter loss.
Sanofi-Aventis SA tumbled the most in seven months after analysts cut their recommendations on concern the drugmaker’s Lantus diabetes treatment carries health risks. Opap SA, Europe’s largest publicly traded gambling company, sank 7.4 percent after Greece said it would impose new taxes on games of chance. UBS, the European bank with the steepest losses from the credit crunch, fell 5.4 percent.
The STOXX 600 slipped 0.1 percent to 204.47. The gauge has lost 1.8 percent since last Friday, posting its first back-to-back weekly declines since the start of a rebound in March. The World Bank predicted this week that the global recession will be deeper this year than it forecast in March, while European Central Bank (ECB) council member Axel Weber said the ECB has used up room to cut interest rates.
“The big question is: will we have a recovery in global growth or will it take a while and growth will remain flat?” said Matthieu Giuliani, a fund manager at Palatine Asset Management in Paris, which oversees about US$5.6 billion. “Today we need a very clear improvement in the economy for stocks to progress.”
The STOXX 600 has retreated 4.8 percent since June 11 amid speculation share prices have outpaced the outlook for economic growth after a three-month, 36 percent rally drove valuations to 25.4 times earnings, the highest level since 2004.
National benchmark indexes declined in nine of the 18 western European markets. France’s CAC 40 slid 1.1 percent as PSA Peugeot Citroen retreated. Germany’s DAX slipped 0.5 percent. The UK’s FTSE 100 fell 0.3 percent.
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