18 Mar 2009
March 17 (Bloomberg) -- European stocks dropped for the first time in six days, led by commodity producers as Alcoa Inc. cut its dividend and Royal Dutch Shell Plc failed to match all of last year's oil and gas production with new discoveries.Shell, Europe's biggest oil company by market value, slipped 1.3 percent. Zodiac SA sank 15 percent after Europe's biggest maker of aircraft seats said operating profit may trail its target. Lindt & Spruengli AG tumbled 5 percent as the Swiss chocolate maker said 2009 profit may fall as much as 28 percent.
The Dow Jones Stoxx 600 Index fell 0.7 percent to 172.05. Europe's regional gauge had posted a five-day, 9.6 percent surge after Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. said they made money during the first two months of 2009. The Stoxx 600 has still lost 13 percent since Dec. 31.
"It's too early to say there are tangible signs of improvement that would call for recovery," said Chicuong Dang, an analyst at KBL Richelieu Gestion in Paris, which oversees $2 billion. "There isn't a reason to believe in a durable recovery. The economic environment remains difficult."
National benchmark indexes slid in 14 of the 18 western European markets. The U.K.'s FTSE 100 declined 0.2 percent as BHP Billiton Ltd. fell. Germany's DAX fell 1.4 percent as Bayer AG slid. France's CAC 40 retreated 0.9 percent.
The Swiss Market Index declined for the first time in six days, losing 0.1 percent. Switzerland is the most expensive market in Europe, with the SMI valued at 27.2 times the profits of its 20 companies, twice that of the MSCI World Index, after almost $42 billion of credit losses and writedowns at UBS AG and Credit Suisse Group AG last year.
Shell, BHP
Shell lost 1.3 percent to 1,619 pence. Shell's reserve replacement ratio, including oil sands, fell to 95 percent in 2008 from 124 percent the previous year, the company said today in a strategy update. That excludes acquisitions, divestments and year-end price effects.
Alcoa's quarterly dividend will be reduced to 3 cents a share from 17 cents, the company said yesterday. Capital spending in 2010 will be $850 million, about half of this year's total.
BHP Billiton, the world's biggest mining company, slid 2.8 percent to 1,309 pence. Rio Tinto Group, the third largest, lost 5.7 percent to 1,982 pence.
ArcelorMittal, the world's biggest maker of steel, retreated 12 percent to 12.66 euros after Nucor Corp., the largest U.S. steelmaker by market value, forecast a first-quarter loss of as much as 65 cents a share because of lower-than-expected demand.
ThyssenKrupp AG, Germany's largest steelmaker, slipped 3.6 percent to 14.48 euros.
Zodiac, Lindt
Zodiac sank 15 percent to 21.03 euros. The company said that 2008-2009 operating profit may be 5 percent below its target after a slowdown in the air bag market.
Lindt & Spruengli tumbled 5 percent to 20,560 Swiss francs. The Swiss chocolate maker known for its golden foil-wrapped Easter bunnies said 2009 profit may fall as much as 28 percent as the company closes U.S. shops and consumers cut spending.
Bayer, Germany's largest drugmaker, dropped 10 percent to 32.69 euros, the biggest decline since December. A pill to prevent blood clots after hip or knee surgery developed by Bayer and Johnson & Johnson may cause excess bleeding in "significantly more patients" than the standard drug, U.S. regulators said.
Italcementi, Bilfinger
Bilfinger Berger AG sank 5.7 percent to 25.45 euros. Goldman Sachs Group Inc. cut its share-price estimate for Germany's second-largest construction company 17 percent to 20.30 euros and reduced its forecasts for European construction spending.
Italcementi SpA retreated 5.1 percent to 7.53 euros. Italy's largest cement maker was cut to "sell" from "neutral" at Goldman Sachs, which cited "a sharp slowdown" in Europe.
Helvetia Holding AG, Switzerland's fourth-largest insurer, rose 9.4 percent to 197 francs after reporting better-than- expected 2008 earnings.
WS Atkins Plc added 9.7 percent to 514 pence, extending six days of gains. Goldman Sachs raised its recommendation on the shares to "buy" from "neutral" and added them to its "conviction buy" list.
Stocks pared declines after U.S. housing starts unexpectedly surged in February from a record low on a rebound in multi-family projects that signaled builders cut too deeply as the credit crunch intensified at the end of 2008.
The U.S. risks sending the world into a depression as its bailouts of failed companies rob healthy businesses of capital, Jim Rogers said in a Bloomberg Television interview today.
"The U.S. is taking assets from competent people and giving them to incompetent people," said Rogers, chairman of Singapore- based Rogers Holdings and the author of books including "Investment Biker." "That's bad economics."
Chairman Ben S. Bernanke and Federal Reserve policy makers may have to ramp up their purchases of mortgage securities and other assets after the economy and job market deteriorated further since they last met, Fed watchers said ahead of the Federal Open Market Committee meeting today and tomorrow in Washington. The Fed is scheduled to issue a statement around 2:15 p.m. tomorrow.
