European stocks declined this week as slower-than-forecast US economic growth overshadowed a rally in banks after EU stress tests eased concern that lenders may need to raise more capital.
Nestle SA and Unilever led food companies lower as US rivals Kellogg Co and Colgate-Palmolive Co reported revenue that missed estimates. Gamesa Corporacion Tecnologica SA tumbled 12 percent after reducing its forecast for wind turbine sales. UBS AG, Switzerland’s largest bank, surged the most in 15 months after earnings beat analysts’ estimates.
The STOXX Europe 600 Index slipped 0.2 percent to 255.35 this past week, trimming the gain in July to 4.9 percent. The gauge has fallen 6.2 percent from this year’s high on April 15 amid concern that Europe’s sovereign-debt crisis may hamper the economic revival.
“The GDP report raises concerns surrounding the sustainability of the recovery,” David Semmens, an economist with Standard Chartered Bank in New York, wrote in an e-mail. “The dire contribution from the US consumer will weigh on sentiment. Without a pick-up in hiring in the US we expect GDP growth to continue to fade through 2010.”
National benchmark indexes fell in 8 of the 18 western European markets. Germany’s DAX lost 0.3 percent and the UK’s FTSE 100 retreated 1 percent. France’s CAC 40 advanced 1 percent as Societe Generale SA and Credit Agricole SA rallied more than 12 percent.
Nestle, the world’s biggest food company, slid 4.1 percent, the biggest drop in almost three months. Unilever, the second-largest consumer-goods company, plunged 6.7 percent, the most since March last year.
Kellogg, the biggest US maker of breakfast cereal, and Colgate, the largest toothpaste maker, reported sales that missed analysts’ projections.
Deutsche Bank AG strategist Gareth Evans downgraded the European food and beverage industry to “neutral” from “overweight,” citing the sector’s performance this year.
Parmalat SpA, Italy’s biggest dairy food company, lost 7.2 percent after being downgraded to “underperform” at CA Cheuvreux. CSM NV, the world’s largest supplier of bakery ingredients, dropped 7.5 percent.
A measure of banking shares in the STOXX 600 posted the biggest gain among 19 industry groups, rallying 4.9 percent.
Greece’s Alpha Bank SA jumped 16 percent and Bank of Ireland PLC soared 15 percent. Royal Bank of Scotland Group PLC, Britain’s biggest government-owned bank, advanced 10 percent. UBS surged 15 percent, the most since April last year.
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