Stocks: Monday's review
Asian stocks fell after European policy makers failed to introduce a plan to stem the region’s debt crisis, dimming the earnings outlook for banks, exporters and raw-material producers.
Esprit Holdings Ltd. (330), a clothing retailer with 83 percent of its sales in Europe, tumbled 20 percent in Hong Kong.
BHP Billiton Ltd. (BHP), the world’s biggest mining company, dropped 1.7 percent in Sydney as crude and metal prices sank. Asian financial shares slumped, paced by Westpac Banking Corp. in Sydney.
Industrial & Commercial Bank of China Ltd. slid 4.2 percent in Hong Kong on speculation China won’t loosen measures to control inflation.
Asian stocks fell today after finance chiefs from the euro region said last week that the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation. Economic reports on Germany this week are forecast to show a decline in investor confidence and a slowdown in manufacturing in Europe’s largest economy.
Greece’s ability to avoid default hangs in the balance as international monitors assess whether Prime Minister George Papandreou can meet the conditions of rescue loans.
European stocks slid, halting a four-day rally for the Stoxx Europe 600 Index, as investors speculated that Greece may not receive an aid payment that would help it avoid default.
Deutsche Bank AG (DBK) led banks lower after Germany’s ruling party lost another regional election. Mining companies and oil producers fell as base metals and crude oil dropped, while Michelin & Cie. declined after Morgan Stanley downgraded the tiremaker.
The benchmark Stoxx 600 dropped 2.3 percent to 224.96 at the 4:30 p.m. close in London, paring last week’s 2.5 percent advance. The gauge has declined 23 percent from this year’s peak on Feb. 17 as the region’s growing debt crisis added to concern that the economic recovery is at risk.
Stocks rallied around the world last week after Germany and France said Greece will remain a euro member and the European Central Bank announced coordinated measures with the Federal Reserve to ensure the region’s lenders have sufficient U.S. dollars.
National benchmark indexes declined in every western European market. France’s CAC 40 Index fell 3 percent, the U.K.’s FTSE 100 Index dropped 2 percent and Germany’s DAX Index lost 2.8 percent.
European Union and International Monetary Fund inspectors hold a teleconference today with Greece’s Finance Minister, Evangelos Venizelos, to judge whether the government is eligible for an aid payment due in October.
Separately, German Chancellor Angela Merkel’s party lost a regional election in Berlin, the last of seven state ballots this year in which voters have punished the governing coalition parties for their handling of the sovereign-debt crisis.
Societe Generale (GLE) SA, which was downgraded by Moody’s on Sept. 14, sank 6.7 percent to 17.69 euros. Credit Suisse Group AG declined 6.2 percent to 21.31 euros.
Lloyds Banking Group Plc slumped 6.7 percent to 33.42 pence as the bank said Finance Director Tim Tookey will leave the U.K.’s largest mortgage lender to join Friends Life, the insurer being built by Resolution Ltd., Clive Cowdery’s acquisition firm.
Michelin sank 6 percent to 45.53 euros after Morgan Stanley lowered its recommendation for the world’s second-largest tiremaker to “underweight” from “overweight.”
Temenos Group AG (TEMN) dropped 7.4 percent to 14.35 francs after Morgan Stanley downgraded the banking-software maker to “equal weight” from “overweight.”
U.S. stocks pared losses after the Greek Finance Ministry said a “productive and substantive discussion took place” during a conference call with international regulators about the country’s financial bailout.
Earlier losses came amid concern Greece would fail to meet the requirements of international aid from the European Union and the International Monetary Fund needed for the country to avoid default.
EU and International Monetary Fund inspectors held a teleconference this evening in Athens with Finance Minister Evangelos Venizelos and other officials to judge whether the government is eligible for an aid payment due next month and on track for a second rescue package approved by EU leaders on July 21.
Greece said “a productive and substantive discussion took place” during the call.
Tomorrow morning, the teams of technical experts already in Athens “will further elaborate on some data and the conference call will be repeated tomorrow at the same time,” the Greek Finance Ministry said in an e-mailed statement.