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Sun, Jan 17, 2010 - Page 10 News List

European stocks drop on JPMorgan, consumer sentiment

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European stocks retreated, extending the Dow Jones STOXX 600 Index’s first weekly drop in five weeks, after JPMorgan Chase & Co reported a loss in its retail bank and an index of US consumer sentiment rose less than forecast.

Deutsche Bank AG and Societe Generale SA led banks lower as JPMorgan, the first of the largest US banks to report fourth-­quarter results, increased credit-loss provisions. Solarworld AG and Q-Cells SE tumbled more than 5 percent on concern the German government is planning to cut ­solar-power subsidies. Man Group PLC sank 6.9 percent after the hedge fund firm reported a decline in assets.

The STOXX 600 slid 0.9 percent to 256.44, bringing last week’s retreat to 1.1 percent. The measure has rallied 62 percent since March, boosted by record-low interest rates in the US and Europe and about US$12 trillion committed by governments worldwide to revive the economy.

“We have had a fair old bullish run for the last few weeks and everyone got caught up in the enthusiasm and prospects for the new year,” said Mark Bon, a London-based fund manager who helps oversee about US$750 million at Canada Life Ltd. “I does feel now that there is a bit of nervousness about the strength of the economic recovery so we could be due for a short-term pull back.”

National benchmark indexes declined in all 18 western European markets, except Iceland. France’s CAC 40 lost 1.5 percent while Germany’s DAX dropped 1.9 percent. The UK’s FTSE 100 slipped 0.8 percent.

The STOXX 600 erased an earlier gain of 0.8 percent after JPMorgan, the second-largest US bank, said it was “cautious” about the outlook for consumer loan defaults and fixed-income trading revenue in the fourth quarter declined from the previous three months. The measure fell further as the Reuters/University of Michigan preliminary index of consumer sentiment increased to 72.8 this month, missing the reading of 74 forecast by economists in a Bloomberg survey.

Combined profit for companies in the US. Standard & Poor’s 500 Index surged 67 percent during the fourth quarter following a record nine-quarter slump in profits, analyst estimates compiled by Bloomberg showed.

Deutsche Bank, Germany’s biggest bank, slid 3.7 percent to 48.5 euros, leading a gauge of banks to the biggest drop among 19 industry groups in the STOXX 600. Societe Generale, France’s second-largest bank, declined 2.7 percent to 49.03 euros, while Switzerland’s Credit Suisse Group AG retreated 4.2 percent to 52 Swiss francs.

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