European stocks declined, paring the best start to a year since 1989, as banks and telecommunications companies dropped.
The STOXX Europe 600 Index dropped 0.5 percent to 367.05 at the close of trading. The gauge rose as much as 0.4 percent earlier, before falling as much as 0.7 percent as Russia’s central bank unexpectedly cut its key rate.
The benchmark measure still surged 7.2 percent in January as the European Central Bank unveiled a 1.1 trillion euro (US$1.2 trillion) quantitative-easing (QE) program to combat deflation. Eurozone consumer prices fell more than economists forecast last month, data showed yesterday.
“We’ll see a pickup in growth after QE, but it will be modest,” said Henrik Drusebjerg, who helps manage 14 billion euros as chief strategist at Carnegie Investment Bank AB in Copenhagen. “Most European countries still need to do more reform. We are beginning to take a look at some European companies. I’m curious how aggressive to see Greece will be on their election promises.”
Greece’s ASE Index fell 1.6 percent, reversing earlier gains. The gauge has tumbled 14 percent this week amid concern a coalition led by Syriza, which won Sunday last week’s election, will challenge austerity measures.
Greek Minister of Finance Yanis Varoufakis said he is not interested in persuading Greece’s official creditors to release the final tranche of bailout funds.
The volume of STOXX 600 shares changing hands was 19 percent greater than the 30-day average, data compiled by Bloomberg show.
Banks were the biggest drag on the STOXX 600, as UniCredit SpA and BNP Paribas SA declined more than 1.8 percent. Banca Monte dei Paschi di Siena SpA slid 7.8 percent after a report the Italian lender may raise more capital than previously planned.
Telecommunications shares also retreated. BT Group PLC lost 2.6 percent after reporting slower broadband growth and a growing pension deficit. Tele2 AB retreated 4.9 percent after fourth-quarter earnings fell short of some projections.
Anglo American PLC and BHP Billiton Ltd gained more than 1.4 percent, pushing a gauge of mining stocks to the best performance among 19 industry groups in the STOXX 600.
Salvatore Ferragamo SpA rose 2 percent after last year’s sales growth excluding currency swings beat analysts’ predictions.
Lagardere SCA fell 2.6 percent after Reuters reported the French media group is in talks with private-equity firms to fund a US$1.2 billion deal with World Duty Free SpA.
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