European stocks posted their steepest weekly drop since July as US reports on home sales and durable goods undermined speculation that the global economic recovery will be robust.
ArcelorMittal and Xstrata PLC led a retreat in basic-resources companies as metals prices fell in London. Liberty International PLC plunged 12 percent, sending a gauge of property-related shares down by the most in more than four months. Hennes & Mauritz AB pulled retailers lower after reporting a deterioration in sales.
The Dow Jones STOXX 600 Index lost 2.4 percent to 238.95 this week, as all 19 industry groups declined. A 51 percent rally since March 9 has pushed the regional gauge’s valuation to the highest level since June 2003, according to Bloomberg data.
“The market can’t go up every day and it’s come up significantly from its lows earlier this year,” said Andrea Williams, a London-based fund manager at Royal London Asset Management, which oversees about US$63 billion.
“The trouble is you get various numbers, one day it’s good and one day it’s bad,” Williams said.
Reports this week showed an unexpected 2.7 drop in sales of US existing homes last month, spurring concern the housing market is struggling to recover.
Stocks also retreated after the US Federal Reserve said it would reduce the size of its emergency programs meant to bolster credit markets, citing “continued improvements” in financial markets.
National benchmark indexes declined in all 18 western European markets except Greece. The UK’s FTSE 100 lost 1.8 percent and Germany’s DAX slid 2.1 percent. France’s CAC 40 retreated 2.3 percent.
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