European Stocks Decline After Four-Week Rout as SAP Drops

By Sofia Horta e Costa

European stocks fell, following their longest streak of weekly losses in more than a year, as worse-than-estimated financial results added to concerns over the region’s recovery.
SAP SE lost 4.4 percent after the world’s largest supplier of business-management software cut its full-year earnings forecast. Royal Philips NV declined 3.3 percent after third-quarter sales and profit missed analysts’ estimates. Nutreco NV rallied the most since at least 1997 after SHV agreed to buy the fish-feed maker.
The Stoxx Europe 600 Index fell 0.2 percent to 318.06 at 10:53 a.m. in London, reversing a gain of as much as 0.2 percent. European equities have led a global rout that erased as much as $5.5 trillion from the value of shares worldwide as concern over the region’s economic recovery re-emerged, amid speculation that the ECB’s stimulus measures would not be enough to spur growth. The region’s stocks gauge pared losses today after people familiar with the matter said the European Central Bank bought short-dated French covered bonds.
“This correction might be the symptom for something larger,” Benedict Goette, founder of asset-management firm Compass Capital AG in Zurich, said in an interview. “I do not expect a big positive impulse from the current earnings season in Europe. Unless a multi-day upmove develops, people will remain nervous. We’re now in the highly volatile phase of attempting to bottom, but I would expect a final bottom only by the end of October or mid-November.”

Year’s Low

The benchmark index reached its lowest level of the year last week after an eight-day slump, its longest losing streak in 11 years. It rebounded on Oct. 17, posting its largest rally since November 2011 as ECB Executive Board member Benoit Coeure said the central bank will start buying assets within days. He will speak in London today.
The number of shares changing hands in Stoxx 600-listed companies was 36 percent greater than the average of the past 30 days, data compiled by Bloomberg showed. The VStoxx Index, a measure tracking expectations for price swings in the Euro Stoxx 50 Index, rallied 39 percent this month, on pace for the biggest jump since April 2010.
Standard & Poor’s 500 Index futures added 0.2 percent today, while the MSCI Asia Pacific Index rallied 2.1 percent.
SAP dropped 4.4 percent to 51.66 euros after saying non-IFRS operating profit will be 5.6 billion euros ($7.2 billion) to 5.8 billion euros this year. In July, it had predicted 5.8 billion euros to 6 billion euros. New software license sales, an indicator of future sales potential, fell about 3 percent to 952 million euros. Analysts had estimated 967 million euros.

Philips Earnings

Philips slipped 3.3 percent to 21.35 euros. Earnings before interest, taxes, amortization and one-time items fell to 536 million euros in the third quarter, less than the 554 million euros projected by analysts. Sales of 5.55 billion euros also missed estimates.
Nutreco climbed 39 percent to 39.11 euros after SHV, a Dutch company with investments in oil exploration and transport, agreed to buy the maker of Skretting fish feed for about 2.7 billion euros ($3.5 billion).
Spirit Pub Co. jumped 7.7 percent to 98 pence. The owner of more than 1,200 U.K. outlets including Chef & Brewer and Flaming Grill is on the verge of being acquired by competitor Greene King Plc after saying it’s willing to recommend a sweetened 723 million-pound ($1.2 billion) bid.

Tesco Asia

Tesco Plc added 2.4 percent to 178.8 pence after the Times said that private equity firms may be interested in acquiring its Asian business. Afren Plc advanced 2 percent to 99.4 pence after the Sunday Times reported it may face a possible offer. Adidas AG rose 5 percent to 57.36 euros after the Wall Street Journal said a group of investors is planning to bid about 1.7 billion euros for its Reebok unit.
Havas SA climbed 6.3 percent to 6.07 euros after a proposed deal that would give billionaire Vincent Bollore majority ownership of the French advertising company. Under the proposal, minority shareholders will get 9 Bollore Group shares, adjusted for a 1-for-100 stock split, for every 5 Havas shares they hold, according to a statement last week.
Holding company Bollore SA lost 7.4 percent to 350.90 euros.