European Stocks Fall a Second Day; BSkyB, BT Group Slide
European stocks dropped for a second day as Moody’s Investors Service downgraded Spain and Cyprus, while Switzerland’s central bank said that Credit Suisse Group AG (CSGN) must increase its capital this year. U.S. index futures were little changed, while Asian shares fell.
Credit Suisse slumped 8.2 percent to its lowest price since 1992. British Sky Broadcasting Group Plc (BSY) and BT Group Plc (BT/A) tumbled 8.1 percent and 3 percent, respectively, after winning the bidding to show 154 English Premier League soccer matches starting in the 2013-14 season. Nokia Oyj (NOK1V) slumped 11 percent after reducing its outlook for the second quarter.
The Stoxx Europe 600 Index (SXXP) dropped 0.9 percent to 240.44 at 11:02 a.m. in London. Futures on the Standard & Poor’s 500 Index expiring in September were unchanged, while the MSCI Asia Pacific Index fell 0.5 percent.
“With details of Spain ’s bank recapitalization plan still taking form, plus this weekend’s Greek election clouded in uncertainty, investors seem very much in a holding pattern, preferring to wait and see what the outcome is before recommitting capital to the market,” said Cameron Peacock, a market analyst at IG Markets in Melbourne .
European stocks decreased 0.4 percent yesterday as borrowing costs increased at debt auctions in Germany and Italy.
Moody’s cut Spain’s rating by three steps to Baa3 from A3 late yesterday, citing the nation’s increased debt burden, weakening economy and limited access to capital markets . Moody’s also lowered Cyprus’s bond rating to Ba3 from Ba1, attributing the downgrade to the increased likelihood of Greece leaving the euro area. The country’s government may have to give more support to Cypriot banks as a consequence.
Spain’s Bond Yields
The yield on Spain’s 10-year debt rose 24 basis points to 6.99 percent, the highest since before the Mediterranean nation started using the euro in 1999.
Italy sold 4.5 billion euros ($5.7 billion) of debt, matching its maximum target, at an auction. The country’s Treasury sold 3 billion euros of its three-year benchmark bond to yield 5.3 percent. That compared with a yield of 3.91 percent when it last sold the securities on May 14.
Credit Suisse reduced its estimate for China’s growth to 7.7 percent from 8 percent, while Deutsche Bank AG lowered its forecast to 7.9 percent from 8.2 percent, according to e-mailed research notes. The predictions indicate that China’s economy will expand at the slowest pace since 1999.
UBS, Credit Suisse
Credit Suisse tumbled 8.2 percent to 17.45 Swiss francs, its biggest decline in 10 months, as the Swiss National Bank said it needed a “marked increase” in capital this year to prepare for risks from a possible escalation of the euro area’s debt crisis.
UBS AG (UBSN) declined 2.2 percent to 10.90 francs after the central bank also recommended that Switzerland’s biggest lender raise more capital in its annual financial stability report .
BSkyB sank 8.1 percent to 639 pence, the biggest plunge in 11 months, after its pay-TV Sky channel increased its spending to retain the rights to show most Premier League games. Sky will show 116 matches from the 2013-14 season. The company will pay 760 million pounds ($1.2 billion) a year for the five packages of live rights for the three years of the new Premier League agreement.
BT lost 3 percent to 202.9 pence, its largest drop in four weeks, after the phone and broadband company won the rights to show 38 matches for 246 million pounds per season.
Nokia slumped 11 percent to 1.98 euros. The mobile-phone maker struggling to recover lost market share predicted that second-quarter operating margins at its devices unit will worsen. The company plans to cut as many as 10,000 jobs and close facilities.
BMW, Daimler Decrease
Bayerische Motoren Werke AG, the world’s biggest maker of luxury vehicles , dropped 2.6 percent to 56.31 euros. Daimler AG, the third-biggest maker of luxury vehicles , fell 3.1 percent to 33.20 euros. Morgan Stanley reduced its earnings-per- share prediction for the carmakers by 5 percent to 10 percent.
Kabel Deutschland Holding AG declined 1.2 percent to 46 euros after Germany’s largest cable operator proposed a dividend payment that missed analysts’ estimates.
Teleperformance SA (RCF) , a French call-center company, fell 2.4 percent to 17.59 euros, its third day of losses. The stock was cut to underperform, meaning investors should sell the shares, from outperform at CA Cheuvreux.
Umicore SA (UMI) declined 4.1 percent to 35.99 euros. The world’s largest recycler of precious metals was downgraded to neutral from outperform at Credit Suisse, meaning that investors should not buy more of the stock.
Petropavlovsk Plc (POG) surged 9.2 percent to 448.6 pence. The Russian gold producer increased its 2012 production target by 20,000 ounces.
To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net
