Frankfurt: European stocks retreated as investors assessed value after the strongest rally in six weeks, with France’s CAC 40 Index among the biggest decliners after a police gun battle with suspects linked to the Paris terror attack.
Air Liquide SA slid the most on the French equity gauge, falling 8.1 per cent after agreeing to purchase US rival Airgas Inc. The CAC 40, which jumped the most in six weeks yesterday, retreated 0.6 per cent at 3:45pm in Paris after the shoot-out left at least two people dead. L’Oreal SA slid 1.5 per cent and LVMH lost 1.4 per cent in France. The Stoxx Europe 600 Index fell 0.2 per cent to 379.04, paring earlier losses of as much as 0.8 per cent.
The Stoxx 600 is falling after a rally in energy producers helped push it higher in the two trading days following the attacks in Paris. The gauge closed yesterday 12 per cent higher than its September low, boosted by optimism that the European Central Bank will add to stimulus measures.
“You’ve had a good run in the market so there’s a short- term profit taking after a really strong day,” said Patrick Spencer, equities vice-chairman at Robert W. Baird & Co. in London. “On top of that, the strong US inflation numbers put further evidence that there’s going to be a rate hike and that’s a concern of European equities as it makes borrowing more expensive for companies.”
Investors are also awaiting minutes from the Federal Reserve due after the close of European trading to gauge the likelihood of an increase in borrowing costs next month. US inflation data yesterday bolstered the case for higher interest rates.
European stocks will be under pressure in the near term because it’s unlikely that riskier assets such as equities will do well if the Fed raises rates and financial conditions tighten, Deutsche Bank AG’s Sebastian Raedler wrote in a note published on November 17.
Among other companies active today, LafargeHolcim Ltd. fell 0.9 per cent after Vontobel Holding AG downgraded the cement maker to hold from buy.
UK Mail Plc tumbled 11 per cent to the lowest in almost three years after the delivery service said it’s cutting dividends as expenses associated with a new headquarters and upgrading equipment will weigh more than previously expected on 2016 earnings.
Enel SpA led utilities lower, falling 2.8 per cent after saying it will buy back its renewables energy business. Telefonica SA lost 1.2 per cent as it traded without the right to its dividend.
Miners posted the best performance on the Stoxx 600, recovering from an earlier slide, as commodity prices rebounded. Glencore Plc advanced 5.4 per cent, Rio Tinto Group added 2.2 per cent and Anglo American Plc gained 4.4 per cent.
Syngenta AG added 4.2 per cent after Monsanto Co.’s chief operating officer said his company is considering whether to make another attempt to acquire the world’s largest pesticide maker. Wirecard AG climbed 1.7 per cent after the payments processor posted a 29 per cent jump in third-quarter earnings.
