European Stocks Extend Their Losses
Wednesday April 27, 2:02 pm ET
By Kabir Chibber
European Stocks Extend Their Losses, Dragged Down by Retail, Semiconductor Shares
LONDON (AP) -- European stocks extended their losses Wednesday as retail shares fell and semiconductor issues suffered for the second straight session after poor results from STMicroelectronics NV.
Germany's DAX 30 index fell 1.1 percent to 4,189, while France's CAC 40 Index slipped 1.6 percent to close at 3,927.7, with markets weaker after data showed U.S. orders for durable goods declined 2.8 percent in March, the largest drop since September 2002.
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London's benchmark FTSE 100 index shed 1.2 percent to close at 4,789.4.
Signals of weak economic growth figured in Europe too, as data showed the latest monthly French business confidence survey falling to 97 in April from 101 in March, against expectations of a reading of 100, according to French statistics agency INSEE. It's the first time in 18 months the survey has fallen below its long-term moving average.
In stocks, retailers slipped after data showing U.S. consumer confidence declined for the third straight month in April, with the Conference Board's index falling to a lower-than-anticipated 97.7 from a revised 103 in March.
Iain Armstrong, an equities analyst at Brewin Dolphin, said the markets were experiencing a "hangover" from that Tuesday data, with poor volumes as the market continues to be concerned about consumer sentiment.
He also cited weaker-than-expected quarterly results from U.K. home improvement retailer Kingfisher PLC, and France's Casino Guichard-Perrachon & Cie SA as adding to concerns raised by recent retail earnings that noted weaker consumer demand. "We are seeing a general tightening of purses," Armstrong said.
Kingfisher led decliners in the FTSE 100 to close 6.5 percent lower as it said it expects first-quarter comparable sales to show a 6 percent decline compared to the previous year, with overall sales broadly flat.
The company said trading has remained weak since it last updated the market in March, with continuing "very tough" conditions in the U.K. retail market. A focus on margin and costs isn't expected to be enough to offset weaker sales, the company said, and reported retail profit for the first quarter is now expected to drop by around 15 percent. The company also said that it has agreed to buy China's OBI Asia Holding Ltd. for an undisclosed price.
France's Casino Guichard ended down 3.3 percent after reporting after the bell Tuesday that first-quarter sales rose 1.1 percent to euro5.075 billion from a restated euro5.019 billion, short of analyst expectations.
British mobile phone retailer and services provider Carphone Warehouse PLC closed down 3.9 percent, in spite of an upgrade to neutral from underweight by J.P. Morgan. The broker cited rapid growth of the group's mobile and fixed line businesses Opal and Talk Talk.
German industrial conglomerate Siemens AG shares dropped during the day to close down 1.9 percent, after it reported a 35.4 percent decrease in its fiscal second-quarter net income to euro781 million, in line with Dow Jones Newswires-compiled expectations.
Profit was hit by a year-ago sale of shares in chipmaker Infineon, though the company still would have seen 3.2 percent profit decline even without the previous gains. Sales rose 4 percent to euro18.56 billion. It's going to spin off its mobile phone making unit while trying to make a deal for outside involvement.
Deutsche Telekom AG closed 4.8 percent lower after its shares began to trade ex-dividend.
European mobile phone chip maker STMicroelectronics ended 5.7 percent lower after it became the third European semiconductor company in two days to miss expectations and give a pessimistic outlook, following Germany's Infineon Technologies AG and ASM International NV.
STMicro swung to net loss of $31 million, or 3 cents a share, saying price competition hurt its revenue.
Other chipmakers also declined. Infineon closed down 1.3 percent, with Dutch chip equipment maker ASML Holding NV ending 1.8 percent lower.
U.K. semiconductor design group ARM Holdings PLC was also pulled lower by the rest of the sector, to show a 2.5 percent fall at the end of the day, in spite of being upgraded to overweight from equal-weight by Morgan Stanley. It believes concerns over the Artisan Components acquisition are overdone.
Kabir Chibber is a correspondent for Dow Jones Newswires |
