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European stocks fell, snapping a three-day rally, as declines in carmakers and mining companies outweighed optimism that an easing in Italy’s borrowing costs indicated the region’s debt crisis won’t deepen.
Stocks erased gains after a report said the European (SXXP) Central Bank’s balance sheet soared to a record after it lent financial institutions more money last week in an attempt to keep credit flowing to the economy during the debt crisis.
Lending to euro-area banks jumped 214 billion euros ($280 billion) to 879 billion euros in the week ended Dec. 23, the Frankfurt-based ECB said in a statement today. Its balance sheet increased 239 billion euros to 2.73 trillion euros.
Italy today sold 9 billion euros of six-month Treasury bills at half the yield it agreed to pay at an auction of the securities last month. The Rome-based Treasury sold the 179-day bills at a rate of 3.251 percent, down from 6.504 percent on Nov. 25. Demand was 1.7 times the amount for sale, compared with 1.47 times last month.
Italy also sold 1.733 billion euros of 2013 notes today to yield 4.853 percent, compared with a yield of 7.814 percent at the last auction on Nov. 25. The bid-to-cover ratio was 2.24, compared with 1.59 last month. Tomorrow Italy will auction four different securities, including a 10-year bond.
National benchmark indexes declined in 13 of the 18 western European markets today. Germany’s DAX fell 2 percent, while France’s CAC 40 lost 1 percent. The Swiss Market Index added 0.1 percent.
BMW fell 3.3 percent to 51.10 euros and Porsche AG dropped 3.1 percent to 40.88 euros. Daimler AG slid 3.9 percent to 33.07 euros.
Deutsche Bank and Commerzbank declined 3.8 percent to 28.63 euros and 4.2 percent to 1.27 euros respectively.
Xstrata lost 2.1 percent to 958.8 pence. Copper retreated in London after a report that industrial production declined in Japan, curbing demand for base metals. Petropavlovsk Plc dropped 2.8 percent to 618 pence and Salzgitter AG slid 2.6 percent to 37.90 euros.
Tesco gained 2.3 percent to 399.8 pence pacing gains among European retailers. Debenhams Plc added 1.5 percent to 57.5 pence, while Home Retail Group Plc, the owner of U.K. Homebase outlets, rallied 4.8 percent to 86.8 pence.
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