European stocks dropped for the first week in seven as US regulators sued Goldman Sachs for fraud and consumer confidence unexpectedly declined, overshadowing an EU-led agreement to rescue Greece.
The STOXX Europe 600 Index slipped 0.7 percent to 267.81 this week, its biggest drop since February, after a sell-off in the last hour of trading as the Securities and Exchange Commission accused Goldman Sachs and one of its vice presidents of defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages.
“There is hardly any room for negative surprises such as the SEC charge at Goldman Sachs,” said Ineke Valke, an Amsterdam-based strategist at Theodoor Gilissen Bankiers, which manages about US$7 billion. “Markets will now probably enter a period of moving sideways until there is some confirmation on economic recovery in the longer term. Momentum seems to have passed.”
The STOXX 600 has climbed 5.5 percent this year as the EU agreed a US$61 billion aid package to help Greece tackle the region’s biggest budget deficit and the Fed pledged to maintain record-low interest rates for an extended period.
National benchmark indexes decreased in 12 of the 18 western European markets. Germany’s DAX fell 1.1 percent and France’s CAC 40 retreated 1.6 percent. The UK’s FTSE 100 decreased 0.5 percent. Greece’s ASE added 0.2 percent, paring two weeks of losses.
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