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19.03.2013 08:13

Stocks: Monday’s review

Asian stocks headed for the biggest decline in eight months, led by raw-material producers, amid concern an unprecedented levy on bank deposits in Cyprus will plunge Europe back into crisis and that China will increase efforts to curb property prices.

Nikkei 225 12,220.63 -340.32 -2.71%

Hang Seng 22,083.36 -449.75 -2.00%

S&P/ASX 200 5,015.4 -104.84 -2.05%

Shanghai Composite 2,240.02 -38.39 -1.68%

Every benchmark gauge in the Asia-Pacific dropped, with the regional measure shedding about $180 billion in share value, equivalent to seven times the size of Cyprus’ economy.

Toyota Motor Corp., the world’s biggest automaker, slid 3.4 percent as the yen gained against all its major peers.

Esprit Holdings Ltd., a Hong Kong-based clothier that counts Europe as its No. 1 market, dropped 2 percent.

BHP Billiton Ltd. (BHP) fell 2.4 percent in Sydney, leading mining companies lower.

European stocks retreated, with the Stoxx Europe 600 Index paring an earlier tumble, after the euro area forced Cyprus to adopt a levy on bank deposits, prompting concern that the region’s debt crisis will reignite.

While Cyprus accounts for less than half a percent of the 17-nation euro area’s economy, the raid on bank accounts risks a resumption of the financial crisis that began in 2009 in Greece. Moody’s Investors Service said that the move limits support for bank creditors across Europe and shows that policy makers will risk disrupting financial markets to avoid sovereign defaults.

The levy enabled the euro area to lower its bailout of Cyprus to 10 billion euros ($13 billion) from an original figure of about 17 billion euros. President Nicos Anastasiades will try to persuade lawmakers to back the plan. Parliament postponed a vote due to take place this afternoon. Cyprus will leave its banks closed until March 21, a government official said, declining to be identified.

National benchmark indexes fell in every western-European market that opened today except Ireland and Iceland. The U.K.’s FTSE 100 and France’s CAC 40 lost 0.5 percent, while Germany’s DAX declined 0.4 percent. Luxembourg’s LuxX Index dropped 2.2 percent today, its biggest slide in seven months.

A gauge of bank shares sank 1.5 percent for the worst performance on the Stoxx 600. UniCredit lost 3.6 percent to 3.69 euros, while Societe Generale SA, France’s second-largest lender, slid 3.3 percent to 28.98 euros. Banco Santander SA, Spain’s biggest bank, dropped 2.3 percent to 5.83 euros.

Ericsson lost 2.2 percent to 83.50 kronor after agreeing to wind down the ST-Ericsson joint venture and divide the assets. The electronics companies failed to find a buyer for the business. STMicroelectronics will incur cash costs of $350 million to $450 million, lower than the charges it had estimated in January. The shares climbed 5.4 percent to 6.17 euros.

Marks & Spencer Group Plc surged 6.9 percent to 398.1 pence, its biggest gain in almost four years. The shares earlier rallied as much as 9.4 percent after the Sunday Times reported that Qatar Investment Authority has considered an 8 billion- pound ($12 billion) bid for the U.K.’s largest clothing retailer. The newspaper cited unidentified people working in the City of London. A person close to the sovereign-wealth fund said today that QIA has not considered making an offer.

U.S. stocks fell, after the Dow Jones Industrial Average reached record highs last week, as a levy imposed by euro-area leaders on Cypriot bank deposits sparked concern the region’s debt crisis is intensifying.

Euro-region finance ministers forced depositors in Cypriot banks to share in the cost of rescuing the island nation, reducing the cost of the bailout by 5.8 billion euros ($7.5 billion) to 10 billion euros. The country accounts for less than half a percent of the 17-nation euro-area economy.

A parliamentary vote on the levy due to take place today was postponed. Equity markets are closed in Cyprus and Greece for a scheduled bank holiday today. Cypriot banks will remain closed tomorrow and March 20, a government official said, asking not to be identified.

The Federal Open Market Committee is scheduled to begin a two-day meeting tomorrow. The committee in December agreed to link its zero-rate policy to thresholds for unemployment and inflation so investors and households know what conditions will prompt the Fed to consider raising its record-low interest rate.

J.C. Penney Co. rallied 6.2 percent, the most in the S&P 500, to $16.44. The department store chain could turn its top 300 stores into a real estate investment trust-like entity that would sublet space to other brands, ISI Group analyst Omar Saad said in a note.

Apple added 2.7 percent to $455.72. The company is poised to boost its dividend by more than a half, according to analysts surveyed by Bloomberg, providing investors hit by a share slump with one of the highest yields in the U.S. technology industry. Chief Executive Officer Tim Cook, who a year ago this month reinstated a dividend and announced a $10 billion buyback, faces mounting pressure to take bolder steps to pay out more of Apple’s $137.1 billion in cash and investments. Investors including David Einhorn’s Greenlight Capital Inc. are pushing for more money as growth slows and competition from rivals such as Samsung Electronics Co. intensifies.

Hewlett-Packard gained 2.9 percent to $22.83, rising the most in the Dow. Morgan Stanley raised its rating on the stock to overweight, citing potential for the company to return more cash to investors. Hewlett-Packard may generate free cash flow of about $6.7 billion in the 2013 fiscal year, almost 35 percent more than the company’s $5 billion forecast, according to Katy Huberty, an analyst at Morgan Stanley.

At the close:

DJIA 14,452.10 -62.05 -0.43%

S&P 500 1,552.10 -8.60 -0.55%

NASDAQ 3,237.59 -11.48 -0.35%

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