European stocks completed the fourth weekly decline on mounting concern that record oil prices, higher borrowing costs and slowing economic growth will erode earnings.
Daimler AG, the world’s second-largest maker of luxury cars, and Ryanair Holdings Plc paced a retreat in companies sensitive to fuel costs as crude rose above US$142 for the first time. Carrefour SA, Europe’s biggest retailer, led retail stocks lower after scaling back forecasts for operating profit and sales.
“High energy costs and oil prices are hampering economic growth,” Wolfgang Matejka, who oversees about US$3 billion as chief investment officer at Vienna-based Meinl Bank AG, said in a Bloomberg Television Interview on Friday.
Europe’s Dow Jones STOXX 600 Index tumbled 2.6 percent to 287.34 this week.
The measure is poised for the worst first half since at least 1987 as record oil prices, inflation and credit-market losses approaching US$400 billion are weighing on shares.
Earnings for companies in the STOXX 600 are expected to drop 0.5 percent this year, compared with 11 percent growth forecast at the end of last year, according to data compiled by Bloomberg.
“Financial markets are doing badly and I believe it will be two to three years from now until this bear market is over,” Uto Baader, chairman of brokerage Baader Wertpapierhandelsbank AG in Unterschleissheim, Germany, said in a Bloomberg Television interview on Friday.
“The subprime crisis, narrowly speaking, is almost over. But the consequences for the real economy are just beginning to be felt,” Baader said.
Daimler dropped 10 percent and Ryanair, Europe’s biggest discount airline, retreated 11 percent.
Lehman Brothers Holdings Inc lowered its earnings estimate for the European car industry for this year by 6 percent and cut its share-price estimates for automakers including Daimler, citing “headwinds” from higher raw-material prices in a report.
Bayerische Motoren Werke AG, the world’s biggest luxury carmaker, declined 6.8 percent and Fiat SpA, Italy’s largest manufacturer, fell 11 percent.
Carmakers in the region face the risk of a 1970s-style oil-price shock, Credit Suisse Group AG wrote in a note June 23.
European retail sales plunged this month as soaring fuel and food prices hit consumers’ budgets, prompting stores to cut jobs and lose confidence about their prospects, the Bloomberg purchasing managers index showed.
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