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European stocks retreated, after the Stoxx Europe 600 Index reached its highest valuation in almost three years, offsetting gains by lenders as central-bank governors diluted a proposed liquidity rule.
In the U.S., Republicans are planning to use the need to raise the American government’s $16.4 trillion debt ceiling to force President Barack Obama to accept spending cuts to entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default.
National benchmark indexes fell in 11 of the 18 western- European markets. France’s CAC 40 Index fell 0.7 percent and Germany’s DAX lost 0.6 percent. The U.K.’s FTSE 100 retreated 0.4 percent.
Rolls-Royce fell 1.5 percent to 904.5 pence. Europe’s largest maker of commercial aircraft and ship engines bribed an executive at Air China Ltd. and China Eastern Airlines Corp. to obtain $2 billion of deals, according to a Sunday Times report. The company declined to comment on the article. The U.K.’s Serious Fraud Office is holding an enquiry into Rolls-Royce’s activity in several countries.
Infineon Technologies AG declined 2.2 percent to 6.43 euros, its biggest drop in a month, as Bank of America Corp. downgraded the shares to underperform, the equivalent of a sell recommendation, from neutral. The brokerage cited Infineon’s valuation.
Barclays Plc and BNP Paribas SA climbed 3.8 percent to 287.2 pence and 1.9 percent to 45.21 euros, respectively. Deutsche Bank AG, Germany’s largest lender, increased 2.8 percent to 35.78 euros and Societe Generale SA, France’s second- biggest bank, added 2.7 percent to 30.13 euros.
Peugeot gained 5.6 percent to 6.52 euros. More than 17 percent of the French carmaker’s shares are out on loan, according to data compiled by Markit. Some investors borrow shares and then sell them, betting that the securities will drop before they have to be repurchased.
Wereldhave NV added 2.3 percent to 50.11 euros after agreeing to sell its U.S. real estate to Lone Star Funds for about $720 million. The Dutch property company plans to focus on shopping centers in western Europe and use the proceeds from the sale to reduce its debt.
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